BILL ANALYSIS Ó
AB 1676
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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