Revisions to California’s Fair Pay Act took effect in 2017. Billed as the “toughest in the nation,” the law made it easier for plaintiffs to sue based on gender-based pay differences for “substantially similar” work, even at different locations. For 2018, California law became tougher still, as employers are now prohibited from asking about an applicant’s salary history or seeking such information, and may not rely on it in deciding on a salary to propose, unless the applicant volunteers the information. The rationale is that because women historically have been paid less than men, requesting salary history (and basing compensation offers on an applicant’s current or prior salary) will perpetuate these differences.
Under federal law, the rules had been different, with the Ninth Circuit Court of Appeals (where California sits) and other Courts of Appeals having ruled that the federal Equal Pay Act does not prohibit basing compensation on prior salary. On April 10, however, the Ninth Circuit reversed itself in a case called Rizo v. Yovino. In that case, a school district acknowledged that it was paying a female math consultant less than it was paying male counterparts, but defended its practice of paying new hires slightly more than their immediate prior salary as non-discriminatory. The Ninth Circuit ruled that even if prior salary was just one factor, the practice was unlawful, even if there is no evidence that the prior salary history was the result of sex discrimination. The Ninth Circuit left open that salary history “may play a role” in negotiations before an offer is made, but did not offer guidance on what role it may play.
Despite this possible loophole, and despite the fact that the United States Supreme Court may overturn this decision and follow the logic of other federal appellate courts, California employers should be extremely leery of even hearing any information about an applicant’s salary history. This is due in part to California law, which is based on a more explicit statute prohibiting it (Labor Code section 432.3). What employers may not realize is that some “off the shelf” standard job application forms might ask this question, and some interviewers who are not properly trained might be unaware of the law. Therefore, it behooves all California employers to review their job applications to identify and remove any question seeking salary history, and to train anyone participating in any stage of the recruiting process to steer far clear of the topic.