BILL ANALYSIS Ó
AB 1017
Page 1
Date of Hearing: April 30, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, 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:
AB 1017
Page 2
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.
AB 1017
Page 3
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
AB 1017
Page 4
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.
AB 1017
Page 5
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.
AB 1017
Page 6
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
AB 1017
Page 7
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
AB 1017
Page 8
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:
AB 1017
Page 9
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).
AB 1017
Page 10
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
AB 1017
Page 11
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
AB 1017
Page 12
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