BILL ANALYSIS Ó AB 1676 Page 1 ASSEMBLY THIRD READING AB 1676 (Campos and Gonzalez) As Amended May 31, 2016 Majority vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Labor |4-2 |Roger Hernández, Chu, |Patterson, Linder | | | |McCarty, Thurmond | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |13-6 |Gonzalez, Bloom, |Bigelow, Chang, | | | |Bonilla, Bonta, |Gallagher, Jones, | | | |Calderon, Eggman, |Obernolte, Wagner | | | |Eduardo Garcia, | | | | | | | | | | | | | | |Roger Hernández, | | | | |Holden, Quirk, | | | | |Santiago, Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: Prohibits the use of employee salary history information, as specified, and enacts other requirements. AB 1676 Page 2 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: 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 AB 1676 Page 3 sex as required by these provisions, or who reduces the wages of any employee in order to comply with these provisions. FISCAL EFFECT: According to the Assembly Appropriations Committee, 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: The author argues that, because changing jobs is often the best opportunity women have to increase their pay, we need to make sure they are not 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. By removing past salary history from the hiring determination and requiring employers to be more transparent, this bill 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. Similarly, supporters of this bill argue that, "by creating a less biased structure for negotiating pay during the hiring process, this bill 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." A coalition of employers, including the California Chamber of Commerce, opposes this measure. They state that basing compensation solely on an applicant's prior salary is already a AB 1676 Page 4 questionable business practice. 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 (Jackson), Chapter 546, Statutes of 2015, 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 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. AB 1017 (Campos) from 2015 was substantially similar to this bill. AB 1017 was vetoed by Governor Brown. Analysis Prepared by: Taylor Jackson / L. & E. / (916) 319-2091 FN: 0003091