On October 12, 2017, Governor Jerry Brown signed into law AB 168, which will go into effect January 1, 2018 as Labor Code 432.3.  This new statute prohibits employers, in many circumstances, from attempting to obtain information regarding a job applicant’s salary history, or from considering that salary history in determining whether to offer employment to an applicant or what salary to offer an applicant.  This prohibition applies only to the applicant’s salary history in the private sector, and generally does not prohibit employers from considering public sector salary history.

Importantly to many LCW clients, the statute specifically states that it applies to all employers, including state and local government employers and the Legislature.  While local agencies are exempt from many requirements of the Labor Code, they will be responsible for compliance with new Labor Code section 432.3.

Restrictions on Seeking Salary History Information and Exception for Government Employees

Section 432.3(b) provides that, “An employer shall not, orally or in writing, personally or through an agent, seek salary history information, including compensation and benefits, about an applicant for employment.”  This language prohibits an employer from asking the employee about his or her prior compensation, including a question to that effect on a written application, or asking the applicant’s former employer, references, or a background check investigator.

However, section 432.3(e) specifically excepts from this prohibition “salary history information disclosable to the public pursuant to federal or state law, including the California Public Records Act or the federal Freedom of Information Act.”  This means that employers can legally inquire into an applicant’s salary history pertaining to employment with federal, state, or local agencies.  This exception is effective for all employers, but is of special interest to public agencies, who frequently hire career civil servants.

Restrictions on Use of Salary History Information

In general, pursuant to Section 432.3(a), “an employer shall not rely on the salary history information of an applicant for employment as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant.”  This means that, generally, even if an employer considers other factors in addition to salary history, if salary history plays any role in the decision-making process, the employer has violated the law.

However, the section 432.3(e) exception regarding salary information publicly available under the California Public Records Act or Freedom of Information Act (i.e., employment with a federal, state, or local agency) excepts the information entirely from the statute.  Therefore, it is legal to consider, as well as obtain, an applicant’s salary history as it pertains to federal or California state or local agency employment.

Further, section 432.3(h) provides that if an applicant “voluntarily and without prompting” provides his or her salary history, an employer can consider that information “in determining the salary for that applicant.”  It is essential to note that the general prohibition from which this exception is carved prohibits an employer from considering salary information in whether to offer employment as well as what salary to offer.  This exception only permits an employer to consider an applicant’s voluntarily provided salary history with respect to how much compensation to offer, but not with respect to whether to offer employment.

Because an applicant’s salary history with respect to employment by a state or local agency is entirely outside the scope of the statute, an employer can legally consider that information when deciding whether to make an offer of employment.

Employer’s Obligation to Provide Pay Scale

Section 432.3(c) requires that an employer “upon reasonable request” provide the pay scale for a position to an applicant for a position.  The statute does not define what constitutes a “reasonable request,” nor does it address an employer’s obligations, if any, with respect to positions that do not have a predetermined pay scale.

No Misdemeanor Liability

Section 433 of the Labor Code makes it a misdemeanor to violate certain provisions of the Labor Code pertaining to prohibited inquiries of applicants.  Section 432.3(d), however, states that Section 433 does not apply to violations of Section 432.3.

Employers who have questions about compliance with new Labor Code section 432.3 should seek advice from trusted employment counsel.