Labor Code section 432.3

AB 168 was approved by Governor Brown on October 12, 2017 which prohibits employers from seeking or taking into consideration an applicant’s prior compensation and benefits when determining whether to hire the applicant, and in setting the applicant’s compensation and benefits.  The new law creates Labor Code section 432.3.  This Friday’s Five covers five issues of the new law that employers must understand:

1. The law applies to all employers, regardless of size, effective January 1, 2018.

2. Employers may not rely on salary history information of an applicant in determining whether to offer employment and in determining the about of compensation to offer.

3. Employers may not seek salary history information, which includes compensation and benefits, about the applicant.

4. Upon a reasonable request, an employer must provide the “pay scale” for the position to an applicant.

5. Nothing in the law prohibits employees from voluntarily disclosing salary history to a prospective employer.

AB 168 was approved by Governor Brown on October 12, 2017 which prohibits employers from seeking or taking into consideration an applicant’s prior compensation and benefits when determining whether to hire the applicant, and in setting the applicant’s compensation and benefits.  The new law creates Labor Code section 432.3.  This Friday’s Five covers five issues of the new law that employers must understand:

  1. The law applies to all employers, regardless of size, effective January 1, 2018.
  2. Employers may not rely on salary history information of an applicant in determining whether to offer employment and in determining the about of compensation to offer.
  3. Employers may not seek salary history information, which includes compensation and benefits, about the applicant.
  4. Upon a reasonable request, an employer must provide the “pay scale” for the position to an applicant.
  5. Nothing in the law prohibits employees from voluntarily disclosing salary history to a prospective employer.

Employers should start taking steps to comply with the new law by the beginning of the new year to ensure compliance.  Some steps to consider include:

  • Train hiring managers about new law and that they are not to seek information from applicants regarding prior salary and benefits history.
  • Remove any requests or questions about salaries at prior employment on applications or other documents provided to candidates.
  • Prepare a set “pay scale” for the positions the employer is hiring for. The law does not set forth what information must be included on the pay scale.  In addition, the law does not explicitly require that this information must be provided in writing to the applicant.  However, employers should consider whether the pay scale should be done in writing in case there is a dispute about whether the pay scale was provided to the applicant and what information was conveyed to the applicant.