BILL ANALYSIS Ó AB 1676 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 1676 (Campos) - As Introduced January 19, 2016 ----------------------------------------------------------------- |Policy |Labor and Employment |Vote:|4 - 2 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill 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. Specifically, this bill: 1)Requires an employer, except state and local government AB 1676 Page 2 employers, upon reasonable request, to provide the pay scale for a position to an applicant for employment. 2)Provides that a violation of this bill's provisions would not be subject to the misdemeanor provision. FISCAL EFFECT: Ongoing administrative costs, in the range of $100,000 to $400,000 (Labor Enforcement and Compliance Fund), for the Division of Labor Standards Enforcement (DLSE) to enforce provisions of this bill. Costs will depend on the number of claims filed with DLSE to investigate complaints. COMMENTS: 1)Background. According to research by Linda Babcock, an economist at Carnegie Mellon University, 51.5% of men and 12.5% of women asked for more money when receiving job offers. She also 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.' ") AB 1676 Page 3 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 negotiations. 2)Purpose. This bill is supported by the Women's Foundation of California who state, "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." 3)Opposition. The Chamber of Commerce opposes this bill. They state there are several legitimate, non-discriminatory reasons why employers seek information regarding prior compensation of an applicant. The employer may not have accurate wage information on what the current market is for potential job positions. By requesting salary information, employers can adjust any unrealistic expectations or salary ranges to match the current market rate for the job. According to the Chamber, this has worked to the benefit of the applicant/employee. The opposition also notes that California just passed SB 358, deemed by many to be the "toughest equal pay law in the nation." They encourage more time to allow SB 358 to take effect before making additional changes. 4)Prior legislation. This bill is substantially similar to AB 1017 of 2015, except that the requirement to provide pay scale information does not apply to the Legislature. Governor Brown AB 1676 Page 4 vetoed AB 1017 and issued the following message: "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 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, enhances 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. Analysis Prepared by:Misty Feusahrens / APPR. / (916) 319-2081