BILL ANALYSIS                                                                                                                                                                                                    ”



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          Date of Hearing:  April 30, 2015


                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT


                               Roger HernŠndez, Chair


          AB 1017  
          (Campos) - As Amended April 16, 2015


          SUBJECT:  Employers


          SUMMARY:  Prohibits the use of employee salary history  
          information, as specified, and enacts other requirements.   
          Specifically, this bill:


          1)Provides that an employer shall not publish or list an  
            advertisement to recruit candidates for hire without including  
            the minimum rate of pay, including overtime, as specified.

          2)Prohibits an employer from paying wages for a position less  
            than what were advertised.

          3)Prohibits an employer from seeking salary history information,  
            including compensation and benefits, from an applicant for  
            employment for an interview or as a condition of employment.

          4)Prohibits an employer from releasing the salary history of any  
            current or former employee to any prospective employer without  
            written authorization from the current or former employee.

          EXISTING LAW:










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          1)Generally prohibits an employer from paying an employee at  
            wage rates less than the rates paid to employees of the  
            opposite sex in the same establishment for equal work on jobs  
            the performance of which requires equal skill, effort, and  
            responsibility, and which are performed under similar working  
            conditions. 


          2)Establishes exceptions to that prohibition where the payment  
            is made pursuant to a seniority system, a merit system, a  
            system which measures earnings by quantity or quality of  
            production, or a differential based on any bona fide factor  
            other than sex. 


          3)Makes it a misdemeanor for an employer or other person acting  
            either individually or as an officer, agent, or employee of  
            another person to pay or cause to be paid to any employee a  
            wage less than the rate paid to an employee of the opposite  
            sex as required by these provisions, or who reduces the wages  
            of any employee in order to comply with these provisions.


          FISCAL EFFECT:  Unknown


          COMMENTS:  This bill is sponsored by the California Employment  
          Lawyers Association and the American Association of University  
          Women (AAUW), who argue that our slow rate of progress on  
          eliminating gender pay inequality is due at least in part  
          because we have allowed employers to preserve historical  
          inequities.


          












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          Recent Research on the Pay Gap


          According to research from the Institute for Women's Policy  
          Research (IWPR), in 2013, female full-time workers made only 78  
          cents for every dollar earned by men, a gender wage gap of 22  
          percent.  They conclude that if change continues at the same  
          pace, it will take 44 years - or until 2058 - for women to reach  
          pay parity.  In California, the gap will close in 2042.


          According to a report by the National Partnership for Women &  
          Families, women in California earn 84 cents for each dollar  
          earned by men (as of October 2014).  California has one of the  
          largest wage gaps for African American and Hispanic women, who  
          make just 64 and 44 cents, respectively, for every $1 a white  
          male makes.


          In 2011, the Georgetown University Center on Education and the  
          Workforce found that college-educated women working full time  
          earn $650,000 less than their male peers do over the course of a  
          lifetime.


          Do Inquiries Into Salary History Perpetuate Inequality?


          According to the sponsors, because changing jobs is often the  
          best opportunity women have to increase their pay we need to  
          make sure they are not penalized by prior salaries that may well  
          have been discriminatory.



          They state that policies that peg current salary to prior pay by  
          default, ignore that the prior salary earned by a male job  
          applicant may itself be the product of sex discrimination or may  








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          reflect the residual effects of the traditionally enhanced value  
          attached to the kind of work usually performed by men.    
          Recognizing these facts, courts have cautioned employers that  
          salary matching is frequently discriminatory.   In Futran v.  
          Ring Radio Co. 501 F. Supp. 734, 739 n.2 (N.D. Ga. 1980), for  
          example, a court held that "to give more than nominal  
          consideration to [prior pay] would serve to perpetuate the  
          historic employment discrimination in wages suffered by females  
          in the work force."  


          The Equal Employment Opportunity Commission (EEOC) has echoed  
          that concern, stating that prior salary history should not be  
          the sole explanation for a wage disparity.   Quoting from court  
          decisions, the EEOC has stated "Prior salary cannot, by itself,  
          justify a compensation disparity. This is because prior salaries  
          of job candidates can reflect sex-based compensation  
          discrimination.  Thus, permitting prior salary alone as a  
          justification for a compensation disparity 'would swallow up the  
          rule and inequality in compensation among genders would be  
          perpetuated.'   quoting Irby v. Bittick, 44 F.3d 949, 955 (11th  
          Cir. 1995).  See also Glenn v. General Motors Corp., 841 F.2d  
          1567, 1571 (11th Cir. 1988) (prior salary alone cannot justify a  
          pay disparity); Faust v. Hilton Hotels Corp., 1990 WL 120615, at  
          *5 (E.D. La. 1990) (reliance on prior salary as a factor other  
          than sex would "allow employer to pay one employee more than an  
          employee of the opposite sex because that employer or a previous  
          employer discriminated against the lower paid employee").

          Critics contend that the impact of prior salaries is  
          particularly concerning in certain industries and across racial  
          lines.  For example, women in Silicon Valley with advanced  
          degrees are making more than 70 percent less than men with the  
          same degrees.  In addition, California has one of the largest  
          wage gaps for African American and Hispanic women, who make just  
          64 and 44 cents, respectively, for every $1 a white man makes.   
          These depressed salaries only serve to devalue a woman's worth  
          and make it harder for her to negotiate better pay.









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          On the contrary, by limiting an employer's ability to ask about  
          prior salary, we help put men and women on more of an equal  
          footing.  Employers already are prohibited from asking certain  
          questions from job applicants, such as marital status, religion  
          or medical history.  This kind of information is simply not  
          relevant and could allow employers to discriminate.


          The sponsors contend that, similarly, pay history is only  
          relevant to the extent it allows employers to determine how low  
          they can drive the bargain. 


          They argue that if we truly want to eliminate the vestiges of  
          pay discrimination, then we cannot allow salary decisions across  
          the job market to be built upon a history of unfair pay.  They  
          contend that it's time we put an end to this prejudicial hiring  
          practice and give women a better chance to negotiate a fair  
          deal.


          Specific Changes Proposed by This Bill - And Proffered Rationale  
          in Support

          First, this bill would prohibit an employer from seeking salary  
          history information, including compensation and benefits, from  
          an applicant for employment for an interview or as a condition  
          of employment.  This bill would also prohibit an employer from  
          releasing the salary history of any current or former employee  
          to any prospective employer without written authorization from  
          the current or former employee.

          As discussed above, the sponsors contend that this would create  
          a "blind process" solution to the gender pay gap issue.   
          According to AAUW, the pay gap begins with a woman's first job.   
          From that moment forward, her past salary will hold down her  
          future salary since salary offers consider past income.  Often  
          this is done by adding 10-15 percent to the previous pay.   








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          Removing salary history removes the inappropriate use of salary  
          as the grading system of the working world.

          Second, this bill would provide that an employer shall not  
          publish or list an advertisement for hire without including the  
          minimum rate of pay, including overtime, as specified.  This  
          bill also prohibits an employer from paying wages for a position  
          less than what were advertised.

          The sponsors contend that most employees in the private sector  
          have no real knowledge of the value of their job or what other  
          employees with similar jobs are making.  Many companies either  
          employ or consult compensation specialists to determine the  
          salary for a job yet they still ask the job candidate to provide  
          desired salary without providing a minimum salary for the job.   
          The typical job applicant/candidate will provide desired salary  
          and salary history while the employer does not provide any  
          financial information about the job.  This uneven distribution  
          of knowledge ensures the employer is able to hire at the lowest  
          salary possible for each candidate.

          Moreover, the sponsors contend that this too perpetuates gender  
          pay inequality.  They state that research done by Linda Babcock  
          at Carnegie Mellon University shows that men state salaries 30  
          percent higher than women when negotiating.   Since many  
          non-government jobs do not include any pay information, the  
          negotiation starts when asked to state a desired salary.   On  
          average, men will set forth a desired salary 30 percent higher  
          number then women.
          




          ARGUMENTS IN OPPOSITION  
          


          A coalition of employers, including the California Chamber of  








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          Commerce, opposes this measure and states the following:


          


            "Limits Candidates Ability to Obtain Job Opportunities:
            [This bill] prohibits an employer from posting a job  
            advertisement unless the advertisement sets forth a minimum  
            rate of pay for the position and states that an employer  
            cannot pay below the advertised rate.  Eliminating an  
            employer's ability to adjust the minimum rate of pay once  
            posted in an advertisement will limit an employer's  
            flexibility to offer an employee a position who may not meet  
            all of the qualifications of the job.  Many employers who  
            interview candidates may find that the employee is not  
            adequately qualified for the position posted, but nonetheless  
            would like to offer him/her employment at a lesser  
            compensation to allow the individual to gain the experience,  
            skills, and training necessary.  For example, recent college  
            graduates, long-term unemployed individuals, or first time  
            employees in the marketplace, may not have the requested  
            qualifications that justify the stated minimum level of  
            compensation, but yet employers would like to give them a job  
            opportunity.  [This bill] would preclude an employer from  
            offering such an applicant the position at a lower rate, which  
            will limit such applicants' employment opportunities. 
          


            [This Bill] Does Not Create Transparency or Address Wage  
          Disparity:


            Employers determine the appropriate wage and salary to pay an  
            applicant based upon various factors, including skill,  
            education, prior experience, as well as the funding available  
            for the job.  Setting forth an artificial minimum rate of pay  
            for a job position will not change this employer  








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            determination.  Moreover, employers may feel compelled to  
            reduce the minimum rate of pay in an advertisement in order to  
            create sufficient room to adjust that rate depending on the  
            various factors and varied candidates for the job.   
            Accordingly, [this bill] will not provide transparency into  
            the rate of pay ultimately offered to the applicant for the  
            job position.


            Moreover, to the extent women actually undervalue their work  
            and skills, forcing an employer to set forth an artificial  
            minimum rate of pay may do more harm than good.  An employee,  
            who undervalues his or her work, is not anymore likely to  
            negotiate for a higher amount from his or her former  
            employment than from an artificial minimum wage rate under  
            [this bill].  Accordingly, that same employee is either going  
            to: (1) experience the same potential set back in compensation  
            as he or she does now; or (2) experience a more significant  
            setback if the applicant assumes that the minimum rate of pay  
            is the final amount the employer is willing to compensate for  
            the position.


            Disclosure of wage rates or salary ranges for a job position  
            or even disclosure of actual compensation of wages has not  
            been proven to address gender equity pay.  In a Sacramento Bee  
            article dated March 28, 2015, it detailed findings that,  
            despite disclosing actual compensation of all employees, women  
            staff in the California Legislature actually made less than  
            male staff.  


            





            Salary Information Can Increase Wages:








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            Despite the assumption that employers have accurate wage  
            information on what the current market is for all potential  
            job positions, they often do not.  By requesting salary  
            information, employers can adjust any unrealistic expectations  
            or salary ranges to match the current market rate for the  
            advertised job position.  This has worked to the benefit of  
            the applicant/employee.  


            Posting a Minimum Commission or Piece Rate in A Job  
            Advertisement Is Unreasonable:


            Unlike a minimum hourly rate, a commission or piece rate is  
            primarily based upon employee output.  Accordingly, forcing an  
            employer to identify a minimum commission or piece rate in a  
            job advertisement that cannot be adjusted is simply  
            unreasonable. 


            Current Protections Exist to Address Pay Disparity:


            California has numerous protections in place to encourage  
            equitable pay for equitable work.  Specifically, Labor Code  
            Section 232 already precludes an employer from preventing an  
            employee from disclosing his or her wages.  Labor Code Section  
            1197.5 mandates an employer provide equal wages for equal  
            work.  The Fair Employment and Housing Act (FEHA) precludes  
            any discrimination in the workplace based upon various  
            protected classifications, including gender.  These existing  
            protections are likely what contributed to California being  
            ranked as one of the top 5 states for gender equity in pay in  
            the 2013 report issued by American Association of University  
            of Women (AAUW).










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            Additional Avenue of Litigation:


            To the extent that forcing employers to set forth a minimum  
            wage rate in their advertisement does not provide any actual  
            transparency or equity in pay, [this bill] represents another  
            mandate on employers that will subject them to potential  
            litigation under the Labor Code Private Attorney General Act  
            (PAGA), with statutory penalties and employee-only attorney's  
            fees.  Exposing employers to additional threats of litigation  
            for failing to set forth a minimum rate of pay for a  
            commission or piece rate, or that includes overtime, as well  
            as credits for meal and lodging, is an unnecessary increase in  
            doing business."








          REGISTERED SUPPORT / OPPOSITION:




          Support


          American Federation of State, County and Municipal Employees


          California Employment Lawyers Association


          California Immigrant Policy Center










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          California Labor Federation, AFL-CIO


          Equal Rights Advocates













          Opposition


          Air Conditioning Trade Association
          Associated Builders and Contractors of California 
          California Association of Bed and Breakfast Inns
          California Association of Winegrape Growers
          California Chamber of Commerce
          California Employment Law Council
          California Grocers Association
          California Hotel and Lodging Association
          California Manufacturers and Technology Association
          California Newspaper Publishers Association
          California Professional Association of Specialty Contractors
          California Trucking Association
          El Centro Chamber of Commerce
          Fairfield-Suisun City Chamber of Commerce
          Fullerton Chamber of Commerce
          Greater Bakersfield Chamber of Commerce
          Greater Conejo Valley Chamber of Commerce
          Greater Fresno Area Chamber of Commerce
          National Federation of Independent Business








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          San Jose Silicon Valley Chamber of Commerce
          Santa Maria Valley Chamber of Commerce Visitor and Convention  
          Bureau
          Southwest California Legislative Council
          The Chamber of the Santa Barbara Region
          Western Electrical Contractors Association 
          Wine Institute


          Analysis Prepared by:Ben Ebbink / L. & E. / (916) 319-2091