By now, most employers know there are certain questions they can ask, and certain questions they must avoid when interviewing a candidate for a job. They know that anti-discrimination laws apply before a worker is even hired, and have heard stories about costly lawsuits resulting from an employer asking the wrong question of a prospective employee during a job interview.
Employers commonly ask applicants for their salary history as part of the job application process. Additionally, employers often use an applicant’s salary history to determine or negotiate compensation for a job offer.
However, the practice of using an applicant’s salary history in negotiating compensation became the focal piece for equal pay advocates a couple years back — the central stated concern being that using salary histories perpetuates existing pay differences for women and minorities that historically have been underpaid relative to other groups. With Gov. Jerry Brown’s signing of AB 168 in October, those practices are now prohibited.
Beginning on Jan. 1, 2018, AB 168 becomes effective as new California Labor Code Section 432.2 and prohibits all employers (private and public) from asking about or relying on an applicant’s prior salary information when deciding whether or not to offer a job, and in determining compensation for the job.
Not only that, this new labor code mandates that employers provide applicants with the pay scale for a position, upon an applicant’s reasonable request, making California the first place in the country to adopt this provision.
The new labor code provision does not define what a “reasonable request” is or how “pay scale” is defined. Until the legislature, administrative agencies or courts weigh in with some guidance, employers will need to use their best judgment in interpreting the law. Potential options related to providing “pay scale” information to applicants may likely include a specific wage rate or salary, a range of pay or a formula-based compensation package.
Section 432.3 does provide a small caveat for employers in that if an applicant, “voluntarily and without prompting,” discloses his or her salary history information, the employer will not be prohibited from relying upon the volunteered information in setting the applicant’s starting salary. Employers still need to be mindful that even though they may rely on truly volunteered salary info, the California Fair Pay Act forbids employers from relying on prior salary history, by itself, to justify any disparity in pay.
All employers should know that awareness of and compliance with employment-related laws isn’t a static exercise — employers need to stay up to date with any changes or revisions to current employment laws, and be aware of new ones, prior to them becoming effective.
Employers should be advised: Labor Code Section 432.2 may be the most notable change that goes into effect in 2018, but it’s not the only new law related to now prohibited interview questions and practices. Employers are strongly encouraged to consult with their legal advisors and review and revise all standard job application forms, websites, online job postings and standardized interview questions so that they do not inadvertently include any now-prohibited questions or requests for information.
In addition to these changes to the labor code, on Jan. 1, 2018, the Labor Commissioner’s powers will be expanded to enforce anti-retaliation laws if it “suspects” that retaliation has occurred.
The Division of Labor Standards Enforcement’s enforcement power is very broad. It includes wage and hour disputes, unfair immigration-related practices, and many other violations of the California Labor Code. However, with the passing of SB 306, the DLSE will now have the power to petition a Superior Court for temporary or preliminary injunctive relief when the DLSE finds “reasonable cause” to believe that an employer has engaged, or is engaging in, unlawful retaliation.
The new law further authorizes the DLSE to issue citations, directing employers to take various remedial actions, and subjects the employer to penalties of $100 per day (up to a maximum of $20,000) for any “willful” refusal to comply with a court order to cease and desist a retaliation violation, to post a notice to employees, or to hire, promote, or otherwise restore a current or former employee to a position.
If the employer disagrees with the citation, the employer must request an administrative hearing before the Labor Commissioner within 30 days of the citation. And if the employer disputes the commissioner’s decision, the employer must seek timely review by the Superior Court through an administrative writ of mandate.
There is no telling how often the DLSE will exercise this newly-expanded power, or how often penalties will be assessed. Accordingly, employers would be best served by making sure their human resources departments are aware of these new laws and that notice of a complaint being filed with the DLSE now has even more serious potential implications.