BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                       AB 1017|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |

                                   THIRD READING 

          Bill No:  AB 1017
          Author:   Campos (D), et al.
          Amended:  7/8/15 in Senate
          Vote:     21  

           SENATE LABOR & IND. REL. COMMITTEE:  4-1, 6/24/15
           AYES:  Mendoza, Jackson, Leno, Mitchell
           NOES:  Stone


           ASSEMBLY FLOOR:  42-29, 5/26/15 - See last page for vote

           SUBJECT:   Employers

          SOURCE:    Author

          DIGEST:   This bill prohibits the use of employee salary history  
          information, as specified, and enacts other requirements.

          Existing law:

          1)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)   Seniority system


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             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)

          2)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 $10,000 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)Makes any person violating this article guilty of a  

          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 a man and according to the  
          American Association of University Women (AAUW). Today that  
          number stands at 78% for women compared to their male  
          counterparts, a gap of 22 cents. AAUW also ranked the wage gap  
          for individual states in the U.S., California ranking 5th with a  
          gap of 84%. 


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          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% of men's wages - an 8%  
          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%. 

          According to a report by the National Partnership for Women and  
          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.

          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 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  


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          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 10 states, including  
          California, have enacted state laws to address employer wage  
          secrecy policies and increase wage transparency. 

          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 F.3d 949, 955 (11th  
          Cir. 1995).

          This bill prohibits 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 also 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. The author argues that AB 1017 is intended to  


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          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,  
          this bill helps put men and women on more of an equal footing.  

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          SUPPORT:   (Verified7/15/15)

          American Federation of State, County and Municipal Employees,  
          California Domestic Workers Coalition 
          California Employer Lawyers Association
          California Labor Federation 
          Equal Rights Advocates 
          Mujeres Unidas y Activas 
          The Women's Foundation of California 

          OPPOSITION:   (Verified7/15/15)

          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 Automotive Wholesalers' Association 
          California Business Properties Association 
          California Chamber of Commerce
          California Employment Law Council
          California Grocers Association
          California Hotel and Lodging Association
          California League of Food Processors
          California Manufacturers and Technology Association
          California Professional Association of Specialty Contractors
          California Restaurant Association
          California Travel Association 
          California Trucking Association


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          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  
          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

          ARGUMENTS IN SUPPORT:   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  

          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  


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          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 that found 85% 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. 

          ARGUMENTS IN OPPOSITION: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  

          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  


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          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 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  
          Sections 2699, for inquiring into an applicant's salary history  
          or prior compensation when there is no ultimate harm to the  

          ASSEMBLY FLOOR:  42-29, 5/26/15
          AYES:  Alejo, Bonilla, Bonta, Burke, Calderon, Campos, Chau,  
            Chiu, Chu, Cooley, Cooper, Daly, Dodd, Eggman, Cristina  
            Garcia, Eduardo Garcia, Gipson, Gomez, Gonzalez, Gordon, Roger  
            Hernández, Holden, Jones-Sawyer, Levine, Lopez, Low, McCarty,  
            Medina, Mullin, Nazarian, Quirk, Rendon, Ridley-Thomas,  
            Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber,  
            Williams, Atkins
          NOES:  Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,  
            Dababneh, Dahle, Beth Gaines, Gallagher, Gatto, Gray, Grove,  
            Hadley, Irwin, Jones, Kim, Lackey, Linder, Mayes, Melendez,  
            Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk,  
          NO VOTE RECORDED:  Bloom, Brown, Chávez, Frazier, Harper,  
            Maienschein, Mathis, O'Donnell, Perea

          Prepared by:Deanna Ping / L. & I.R. / (916) 651-1556
          7/15/15 16:31:49

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