BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1017|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 1017
Author: Campos (D), et al.
Amended: 8/24/15 in Senate
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 4-1, 6/24/15
AYES: Mendoza, Jackson, Leno, Mitchell
NOES: Stone
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 42-29, 5/26/15 - See last page for vote
SUBJECT: Employers
SOURCE: Author
DIGEST: This bill prohibits the use and release of employee
salary history information, as specified.
Senate Floor Amendments of 8/24/15 remove the provision of the
bill that allowed the release of salary history to a prospective
employer with employee written authorization and specify that
the bill does not apply to information disclosable to the public
pursuant to federal or state law.
ANALYSIS:
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
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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
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:
1)Prohibits the use of employee salary history information.
2)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.
3)States that this section shall not apply to salary history
information disclosable to the public pursuant to federal or
state law, including but not limited to, the California Public
Records Act or federal Freedom of Information Act.
Comments
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 50 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
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22 cents. AAUW also ranked the wage gap for individual states in
the U.S., California ranking fifth with a gap of 84%.
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.
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."
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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
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: (Verified8/26/15)
9to5
American Federation of State, County and Municipal Employees,
AFL-CIO
California Domestic Workers Coalition
California Employer Lawyers Association
California Labor Federation
Equal Rights Advocates
Mujeres Unidas y Activas
The Women's Foundation of California
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OPPOSITION: (Verified8/26/15)
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
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
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
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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 AAUW, 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% 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
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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 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
applicant/employee.
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,
Wood
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NO VOTE RECORDED: Bloom, Brown, Chávez, Frazier, Harper,
Maienschein, Mathis, O'Donnell, Perea
Prepared by:Deanna Ping / L. & I.R. / (916) 651-1556
8/26/15 16:51:20
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