This post was authored by Paul Knothe.

Assembly Bill 2282, signed into law by Governor Brown on July 18, 2018, attempts to clarify elements of California’s salary history and equal pay statutes, Labor Code sections 432.3 and 1197.5.  This legislation, which appears to help answer several common questions about these statutes, takes effect January 1, 2019.

Update to Salary History Statute

The salary history statute, Labor Code section 432.3, went into effect January 1, 2018.  In short, Labor Code section 432.3 prohibits employers from seeking an applicant’s salary history in previous private sector employment, requires an employer to provide an applicant with the pay scale for the position upon reasonable request, and restricts how employers can use properly obtained salary history information. For more detail, please refer to our previous blog post here.

AB 2822 answers four questions employers had about section 432.3:

  1. Does asking about an applicant’s salary expectations constitute “seeking” his or her salary history?

No. This was a commonly asked question by employers, concerned that asking an applicant for his or her salary expectations would be seen as a back-door way of “seeking” salary history.  The amended section 432.3, at subdivision (i), now reads “Nothing in this section shall prohibit an employer from asking an applicant about his or her salary expectation for the position being applied for.”

2. Is a current employee who applies for a different position with the employer an “applicant”?

No. New subdivision (k) defines “applicant” as an “individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position.”  This language avoids placing the employer in the untenable position of being required to avoid consideration of salary history information that is already in their possession.

3. What is a “pay scale”?

For purposes of the requirement that an applicant be provided with the pay scale for a position upon reasonable request, a revision to subdivision (c) defines “pay scale” as “a salary or hourly wage range.” Other pay, such as bonus pay, need not be included in the pay scale provided to an applicant.

4. What constitutes a “reasonable request” for a pay scale?

AB 2282 further revises subdivision (c) of Labor Code 432.3 to define a “reasonable request” for a pay scale as “a request made after an applicant has completed an initial interview with the employer.” Therefore, an employer is not required to comply with a request for a pay scale from an applicant who has not completed an interview.

Update to California Equal Pay Act

California’s Equal Pay Act, originally enacted in 1949, has been subject to several recent revisions. First, it was amended effective January 1, 2017, to prohibit employers from relying solely on an applicant’s previous salary in making pay determinations. It was amended again effective January 1, 2018, to specify that public sector employers are subject to the equal pay laws, with the exception of the Section 1199.5, which makes it a misdemeanor to fail to provide equal pay to employees of differing sexes, races, or ethnicities.

AB 2282 revises Section 1197.5 to further restrict consideration of an employee’s prior salary in making a pay determination. The statute currently provides that  “Prior salary shall not, by itself, justify any disparity in compensation”; when the revision goes into effect on January 1, 2019, the phrase “by itself” will be deleted.

However, AB 2822 also specifically permits an employer to make a compensation decision for one of its current employees based on that current employee’s existing salary, so long as any wage differential resulting from that compensation is justified by a seniority system, a merit system, a system that measures earning by quantitate or quality of production, or a bona fide factor other than race or ethnicity, such as education, training, or experience.

Employers who have questions about the effects of AB 2282 should seek advice from trusted employment counsel.