BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: AB 1017 Hearing Date: June 24,
2015
-----------------------------------------------------------------
|Author: |Campos |
|-----------+-----------------------------------------------------|
|Version: |May 18, 2015 |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Urgency: |No |Fiscal: |Yes |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Consultant:|Deanna Ping |
| | |
-----------------------------------------------------------------
Subject: Employers.
KEY ISSUE
Should the Legislature prohibit an employer from seeking salary
history information from an applicant for an interview or as a
condition of employment?
Should the Legislature 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?
ANALYSIS
Existing law 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 where the
performance of which requires equal skill, effort, and
responsibility and which are performed under similar working
conditions, except where the payment is made pursuant to a:
a) a seniority system
AB 1017 (Campos) Page 2
of ?
b) merit system
c) system which measures earnings by quantity or
quality of production, or a differential based on any
bona fide factor other than sex.
(Labor Code §1197.5)
Existing law states that an employer that pays or causes to be
paid any employee a wage less than the rate paid to an employee
of the opposite sex and is guilty of a misdemeanor and is
punishable by a fine of not more than ten thousand dollars or by
imprisonment for not more than six months. (Labor Code §1199.5)
This Bill prohibits the use of employee salary history
information, as specified, and enacts other requirements.
Specifically, this bill:
1)Prohibits an employer, orally or in writing, from seeking
salary history information, including compensation and
benefits, from an applicant for an interview or as a condition
of employment.
2)Prohibits an employer from releasing the salary history of any
current or former employee to any prospective employer in
response to a request, as part of an interview or hiring
process, without written authorization from the current or
former employee.
3)Would make any person violating this article guilty of a
misdemeanor.
COMMENTS
1. Research on Gender Pay Disparity
There have been numerous studies dedicated to calculating
disparities in earnings between men and women in the workplace
over the last fifty years. In 1963, women who worked full-time
year-round made 59 cents on average for every dollar earned by
AB 1017 (Campos) Page 3
of ?
a man and according to the American Association of University
Women (AAUW). Today that number stands at 78 percent for women
compared to their male counterparts, a gap of 22 cents. AAUW
also ranked the wage gap for individual states in the US,
California ranking 5th with a gap of 84 percent.
This gap has narrowed due to various factors, including
women's progress in education and workforce participation. A
study from Francine D. Blau and Lawrence M. Khan, "The Gender
Pay Gap: Have Women Gone as Far as They Can?" found that if
women had the same education, experience, demographic
characteristics, industrial and occupational distribution, and
union coverage as men, the wage ratio would rise to about 91
percent of men's wages - an 8 percent unexplained difference
that the researchers suggest could be influenced by
discrimination. A 2013 Congressional Research Service report
"Pay Equity: Legislative and Legal Developments" referenced a
study commissioned by the U.S. Department of Labor that used a
different data source than Blau and Kahn from 2007 and a
slightly different set of personal and human capital
characteristic controls. The study found an unexplained
earnings differential between 5 and 7 percent.
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.
2. Legislative Effort for Pay Equity
On a federal level, the Equal Pay Act of 1963 prohibits
covered employers from paying lower wages to female employees
than male employees for "equal work" on jobs requiring "equal
skill, effort, and responsibility" and performed under similar
working conditions at the same location. The most recent piece
of pay equity legislation signed into law by President Obama
was the Lilly Ledbetter Act of 2009 which extends the time
period in which an employee can file a claim to recover lost
wages due to discrimination. Other pay equity bills that are
under consideration at the federal level include the Paycheck
AB 1017 (Campos) Page 4
of ?
Fairness Act which would provide greater wage transparency as
well as the Fair Pay Act which would substitute "equivalent
jobs" for the "equal" work standard.
California enacted the California Equal Pay Act in 1949 with
"equal pay for equal work" language, similar to the federal
Equal Pay Act of 1963. States such as Alaska, Arkansas, Idaho,
Illinois, Maine, Maryland, Massachusetts, North Dakota,
Oklahoma, Oregon, South Dakota, Tennessee, West Virginia, have
state Equal Pay Acts with standards of equal pay for work of a
substantially similar or comparable character. And according
to a Fact Sheet from the Women's Bureau ten states, including
California, have enacted state laws to address employer wage
secrecy policies and increase wage transparency.
3. Need for this bill?
According to the author, changing jobs is often the best
opportunity women have to increase their pay and it is
important to make sure they are not penalized by prior
salaries that may have been discriminatory. The author notes
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 reflect
the residual effects of the traditionally enhanced value
attached to the kind of work usually performed by men. The
courts have recognized this and have cautioned employers that
salary matching can be a discriminatory practice. 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
AB 1017 (Campos) Page 5
of ?
F.3d 949, 955 (11th Cir. 1995).
This bill would prohibit an employer from seeking salary
history information, including compensation and benefits, from
an applicant 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. The author argues that AB 1017 is
intended to create a 'blind' process solution to the gender
pay gap issue, especially for employers that may not realize
the impact of long established practices on female workers.
The author states that by limiting an employer's ability to
ask about prior salary, we help put men and women on more of
an equal footing.
4. Proponent Arguments :
Proponents note that a recent report from the Institute for
Women's Policy Research stated that if progress continues at
its current rate, the gender wage gap will note close until
2042. Proponents argue that the current slow rate of progress
could be due in part because employers are allowed to base
salary decisions during the hiring process on prior salaries
that could reflect historical inequities. Proponents also note
that according to American Association of University Women,
the pay gap begins with a woman's first job and from that
moment forward, her past salary will hold down her future
salary since salary offers consider past income. Proponents
argue that removing salary history removes the inappropriate
use of salary as the grading system of the working world.
Proponents 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. They argue that 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. Proponents note that the typical
job applicant/candidate will provide desired salary and salary
history while the employer does not provide any financial
information about the job. Proponents argue that this uneven
distribution of knowledge ensures the employer is able to hire
at the lowest salary possible for each candidate. Proponents
bring attention to a study by payscale.com that found 85
AB 1017 (Campos) Page 6
of ?
percent of employers use salary ranges to structure
compensation programs, based on online salary data, salary
surveys, association data, or consultants.
Moreover, proponents counter the opponent argument that salary
data allowed employers to adjust unreasonably expectations or
salary ranges to match the market rate for the position by
arguing that employers can easily adjust their expectations or
salary range based on the salary requested by the job
application, as opposed to her prior salary, which is often an
arbitrary amount based on a prior employer's judgment that may
or may not have been discriminatory. Proponents conclude that
by creating a more unbiased structure for negotiating pay
during the hiring process, AB 1017 will help empower women to
negotiate a fair salary and hopefully get us closer to
achieving pay equity in California.
5. Opponent Arguments :
Opponents argue that there are several legitimate,
non-discriminatory reasons why employers seek information
regarding prior compensation of an applicant -for example,
employers may not have accurate wage information on what the
current market is for all potential job positions and in
competitive industries, business competitors can utilize
salary data to lure talented employees from their workforce.
According to opponents, by requesting salary information,
employers can adjust any unrealistic expectations or salary
ranges to match the current market rate for the advertised job
position. Additionally, opponents argue it can be utilized as
a reference regarding whether the employee's expectations of
compensation far exceed what the employer can realistically
offer.
Opponents note that the concern in question asks if the
applicant's final compensation is offered/paid compared to
those in the same job category. Opponents argue that Labor
Code Section 1197.5 requires an employer to provide equal pay
for equal work, which Senator Jackson is seeking to strengthen
through SB 358. Opponents also note that the federal Equal Pay
Act, the Fair Employment and Housing Act, and Title VII
preclude an employer from discriminating against an employee,
including wages, on the basis of gender - arguing that there
are existing protections to preclude an employer from paying a
AB 1017 (Campos) Page 7
of ?
female employee less, even if the employee's prior salary was
lower than her male counterpart.
Lastly, opponents argue an employer should not be subject to
litigation under the Labor Code Private Attorneys General Act
(PAGA) Sections 2699, for inquiring into an applicant's salary
history or prior compensation when there is no ultimate harm
to the applicant/employee.
6. Prior Legislation :
SB 358 of 2015 (Jackson) - would prohibits an employer from
paying any employee at wage rates less than the rates paid to
employees of the opposite sex for work of a comparable
character on jobs the performance of which requires comparable
skills, effort, and responsibility, and that are performed
under similar working conditions and remove the 'any bona fide
factor other than sex' exception to instead a bona fide factor
with a business necessity.
AB 2555 of 2006 (Oropeza) - would have increased the damages
for which an employer may be liable for gender-based pay
discrimination and impose a civil penalty for violations of
law, as specified; establish a state Equal Pay Commission as
specified; require employers of 50 or more to provide each
employee with a written job statement. This bill was vetoed by
Governor Schwarzenegger.
AB 169 of 2005 (Oropeza) - would have increased the amount of
liquidated damages due to employees who are paid unfairly in
violation of existing law relating to gender-based payment
discrimination. This bill was vetoed by Governor
Schwarzenegger.
AB 2317 of 2004 (Oropeza) -would have increased the amount of
liquidated damages paid for violations of state law
prohibiting gender-based pay discrimination. This bill was
vetoed by Governor Schwarzenegger.
SUPPORT
American Federation of State, County and Municipal Employees,
AFL-CIO
AB 1017 (Campos) Page 8
of ?
California Employment Lawyers Association
OPPOSITION
California Chamber of Commerce
Air Conditioning Trade Association
Associated Builders and Contractors of California
Auto Care Association
California Association of Bed and Breakfast Inns
California Association of Winegrape Growers
California Business Properties Association
California Employment Law Council
California Grocers Association
California Hotel and Lodging Association
California League of Food Processors
California Manufacturers and Technology Association
California Restaurant Association
California Professional Association of Specialty Contractors
California Travel Association
California Trucking Association
CAWA - Representing the Automotive Parts Industry
Civil Justice Association of California
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
Rancho Cordova Chamber of Commerce
Redondo Beach Chamber of Commerce and Visitors Bureau
San Jose Silicon Valley Chamber of Commerce
Santa Maria Valley Chamber of Commerce Visitor and Convention
Bureau
South Bay Association of Chambers of Commerce
Southwest California Legislative Council
The Chamber of the Santa Barbara Region
Torrance Area Chamber of Commerce
Western Electrical Contractors Association
Wine Institute
-- END --
AB 1017 (Campos) Page 9
of ?