BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                                    AB 1676


                                                                     Page A


          Date of Hearing:  April 20, 2016


                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT


                               Roger Hernández, Chair


          AB 1676  
          (Campos) - As Introduced January 19, 2016


          SUBJECT:  Employers:  salary information


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


          1)Prohibits an employer, including state and local government  
            employers, from seeking salary history information, including  
            compensation and benefits, about an applicant for employment  
            either personally or through an agent.


          2)Requires an employer, except state and local government  
            employers, upon reasonable request, to provide the pay scale  
            for a position to an applicant for employment.


          3)Provides that a violation of this bill's provisions would not  
            be subject to the misdemeanor provision.


          EXISTING LAW:  













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          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 the performance  
            of which requires equal skill, effort, and responsibility, and  
            which are performed under similar working conditions. 


          2)Establishes exceptions to this 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:  The author argues that, it has been 50 years since  
          the enactment of the Equal Pay Act, seven years since President  
          Obama signed the Lilly Ledbetter Fair Pay Act and women continue  
          making substantially less than men.  Women earn 78 cents for  
          every dollar their white male counterparts make. 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.


          Because changing jobs is often the best opportunity women have  
          to increase their pay, we need to make sure they are not  











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          penalized by prior salaries that may well have been  
          discriminatory.  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.  
           On average, California women who are employed full time lose a  
          total of approximately $37.7 billion every year due to the wage  
          gap.  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.  Women who are surgeons earn 71 percent of what  
          men earn, while food preparers earn 87 percent, according to  
          data from Claudia Goldin, a Harvard economist. 


          


          The pay gap begins early in women's careers. According to a  
          study by the American Association of University Women, women one  
          year out of college, working full time, were paid on average  
          just 82 percent of what their male counterparts make.  This  
          number shows that there is still a significant wage gap when  
          accounting for age, education and family responsibilities.





          These lost wages mean families have less money to spend on goods  
          and services that help drive economic growth.  In California  
          today, mothers are the primary or sole breadwinners in nearly 40  
          percent of families, and married mothers are the primary or  
          co-breadwinners in nearly two-thirds of families.  That means  
          women's wages are key to their families' ability to make ends  
          meet and get ahead. 














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          According to a recent report from the Institute for Women's  
          Policy Research, the gender wage gap in the United States will  
          not close until 2058 if progress continues at its current rate.   
          But perhaps our slow rate of progress is due at least in part  
          because we have allowed employers to preserve historical  
          inequities.





          By removing past salary history from the hiring determination  
          and requiring employers to be more transparent, AB 1676 will  
          help ensure that employers will not be able to use a history of  
          low pay as justification for continuing to underpay women.   
          According to the author, it's time we put an end to this  
          prejudicial hiring practice and give women a better chance to  
          negotiate a fair deal. 





          Argument Regarding Practical Application of Previous Salaries &  
          Salary Negotiations 





          A New York Times article from January 2016 offers insight into  
          the potential practical applications of using previous salaries  
          as a hiring tool and the gender inequities often found in salary  















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          negotiations. <1>





          When receiving job offers, 51.5 percent of men and 12.5 percent  
          of women asked for more money, according to a study of Carnegie  
          Mellon University graduate students by Linda Babcock, an  
          economist at the university. In other research, she found that  
          when women asked (for more money), they asked for 30 percent  
          less than men requested. 





          Her research and that of others also has found that women are  
          penalized for negotiating, while men are rewarded for the same  
          behavior.  (As the actress Jennifer Lawrence wrote in Lenny  
          after the Sony hacking revealed that she was paid less than her  
          male co-stars, she didn't fight for more because "I didn't want  
          to seem 'difficult' or 'spoiled.' ") 





          Because starting salaries determine raises and future salaries,  
          women who do not bargain lose as much as $750,000 for  
          middle-income jobs and $2 million for high-income jobs over  
          their careers, Ms. Babcock found.  One solution, Ms. Babcock  
          said, is to coach women to negotiate. Another is to change  
          corporate practices so the people who set compensation are aware  
          of the disparity and are advocates for women during  
          ---------------------------


          <1>The New York Times, How to Bridge that Stubborn Pay Gap, by  
          Claire Cain Miller, January 15, 2016.    
          http://www.nytimes.com/2016/01/17/upshot/how-to-bridge-that-stubb 
          orn-pay-gap.html?_r=0 








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          negotiations. 





          Arguments in Support


          The Women's Foundation of California supports this measure and  
          states, "By creating a less biased structure for negotiating pay  
          during the hiring process, AB 1676 will be a proactive way to  
          help empower women to negotiate a fair salary and hopefully get  
          us closer to achieving pay equity in California."


          The California Federation of Teachers supports this measure and  
          states, "Recently, government officials have started to  
          recognize the discriminatory impact that prior salaries can have  
          on women in the job market.  This past year, the Chair of the  
          Equal Employment Opportunity Commission advised employers on how  
          to ensure equal pay for equal work, including eliminating  
          "discriminatory pay gaps on the basis of prior salary."  Basing  
          an employee's compensation off of their previous salary puts  
          women at a disadvantage because their salary is then just  
          compounded with any past biases or negotiation disadvantages.   
          It becomes a cycle that follows women for the entirety of their  
          career.  The value of each position should be based on its  
          duties, and the skill, education, and experience of an  
          applicant, not on a person's sex.  Research has shown that wage  
          transparency raises wages and reduces disparity. AB 1676  
          (Campos) will move us closer to achieving pay equity in  
          California." 


          Arguments in Opposition

          A coalition of employers, including the California Chamber of  
          Commerce, opposes this measure.  They state that basing  











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          compensation solely on an applicant's prior salary is already a  
          questionable business practice. See EEOC Compliance Manual,  
          December 5, 2000 (stating,"[p]rior 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."  However, they argue that there are several  
          legitimate, non-discriminatory reasons why employers seek  
          information regarding prior compensation of an applicant.   
          Employers do not necessarily have accurate wage information on  
          what the current market is for all potential job positions.   
          Employers in competitive industries often do not advertise  
          salaries, in order to utilize their pay structure as a way in  
          which to lure talented employees from their competition.  By  
          requesting salary information, employers can adjust any  
          unrealistic expectations or salary ranges to match the current  
          market rate for the advertised job position. 





          Opponents also argue that Labor Code Section 1197.5 requires an  
          employer to provide equal pay for substantially similar work,  
          which Senator Jackson strengthened last year through SB 358,  
          which was signed into law. Senator Jackson, numerous media  
          outlets and various articles have referenced SB 358 as the  
          "toughest equal pay law in the nation."  SB 358 went into effect  
          on January 1, 2016. Adequate time has not been given to assess  
          how implementation of SB 358 is faring.


          


          Opponents also argue that this bill will be subject to increased  
          litigation because any violation will be subject to litigation  











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          under the Labor Code Private Attorneys General Act (PAGA),  
          Sections 2698, et seq. Under this bill, a simple inquiry into an  
          applicant's salary history or prior compensation when there is  
          no ultimate harm to the applicant/employee would create an  
          opportunity for litigation.


           


          Finally, opponents state that his bill indicates it applies to  
          all state and local government employees, including the  
          Legislature, however it specifically excludes all salary history  
          information that is required to be publicly disclosed, such as  
          all of the salaries of existing Legislative staff.   They state  
          there is simply no justification to impose a prohibition onto  
          private sector employers, but not a public sector employer, such  
          as the Legislature; especially because the government is not  
          immune from the issue of wage disparity.


               


          Previous Related Legislation 


          AB 1017 (Campos) from 2015 was substantially similar to AB 1676.  
           AB 1017 was vetoed by the Governor.  The Governor's veto  
          message stated:


            "I agree with the sponsors that we must endeavor to ensure  
            that all workers are paid fairly and do not receive a lower  
            wage because of their gender or any other immutable  
            characteristic that has no bearing on how they will perform in  
            their job. This year, I signed SB 358 that gives California  
            the strongest equal pay law in the nation. This bill, however,  
            broadly prohibits employers from obtaining relevant  











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            information with little evidence that this would assure more  
            equitable wages. Let's give SB 358 a chance to work before  
            making further changes."  


          SB 358 (Jackson) Chapter 546, Statutes of 2015 strengthens the  
          California Equal Pay Act by, among other things, clarifying the  
          relative burdens of proof and prohibiting retaliation against  
          employees for disclosing or discussing their wages with  
          co-workers.  


          REGISTERED SUPPORT / OPPOSITION:




          Support


          9 to 5 California


          Alliance of Californians for Community Empowerment


          American Association of University Women 


          Attorney General Kamala D. Harris


          California Asset Building Coalition


          California Child Care Resource and Referral Network


          California Domestic Workers Coalition











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          California Employment Lawyers Association


          California Federation of Teachers


          California Latinas for Reproductive Justice


          California Partnership


          California Women's Law Center


          California Work and Family Coalition


          Child Care Law Center


          Courage Campaign


          Equal Rights Advocates


          Legal Aid Society Employment Law Center


          LIUNA Locals 777 & 792


          Mujeres Unidas Y Activas


          National Council of Jewish Women- California











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          Parent Voices


          Raising California Together


          Santa Clara County Board of Supervisors


          Santa Clara County Commission on the Status of Women


          The Association on the California Commission for Women


          The Center for Popular Democracy


          The Opportunity Institute


          Tradeswomen, Inc.


          Voices for Progress


          Western Center on Law and Poverty


          Women's Foundation of California




          Opposition












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          Agricultural Council of California 


          California Asian Pacific Chamber of Commerce


          California Association for Health Services at Home


          California Association of Winegrape Growers


          California Business Properties Association


          California Chamber of Commerce


          California Farm Bureau Federation


          California Hotel and Lodging Association


          California League of Food Processors


          California Manufacturers and Technology Association


          California Newspaper Publishers Association


          California Professional Association of Specialty Contractors


          California Restaurant Association












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          California Retailers Association


          California State Association Counties


          California State Council of the Society of Human Resource  
          Management


          California Travel Association


          California Trucking Association


          Camarillo Chamber of Commerce


          Carlsbad Chamber of Commerce


          Chambers of Commerce Alliance Ventura and Santa Barbara Counties


          Civil Justice Association of California


          Desert Hot Springs Chamber of Commerce


          El Centro Chamber of Commerce & Visitors Bureau


          Greater Conejo Valley Chamber of Commerce


          Greater Fresno Area Chamber of Commerce











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          Greater Riverside Chambers of Commerce


          Greater San Fernando Valley Chamber of Commerce


          Lake Tahoe South Shore Chamber of Commerce


          League of California Cities


          Motion Picture Association of America, Inc.


          National Federation of Independent Business


          Norco Area Chamber of Commerce & Visitors Center


          North Orange County Chamber


          Rancho Cordova Chamber of Commerce


          Redondo Beach Chamber of Commerce & Visitors Bureau


          Santa Ana Chamber of Commerce 


          Santa Maria Valley Chamber of Commerce Visitor & Convention  
          Bureau













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          South Bay Association of Chambers of Commerce


          Southwest California Legislative Council


          The Chamber of the Santa Barbara Region


          Torrance Area Chamber of Commerce


          Western Manufactured Housing Communities Association 


          Wine Institute




          Analysis Prepared by:Taylor Jackson / L. & E. / (916) 319-2091