After careful review, Assembly Bill 168 (AB 168) was recently signed by California Governor Jerry Brown. This bill impacts the hiring process for all employers, including state, local government employers, and the Legislature.
These are the requirements California employers need to keep in mind:
- Employers cannot use salary history to determine whether to offer employment.
- Employers cannot use salary history to determine what salary to provide.
- Employers cannot ask for salary history.
- Employers must share the pay range for a position upon reasonable request.
Requiring salary history has been hotly debated. However, there are benefits from this new legislation. Savvy businesses will understand how to change their hiring process and create positive outcomes. Here are some examples of how the bill can help HR Managers:
- Help create a diverse workplace. Studies show that diverse leadership teams create greater profits. However, research from McKinsey notes only 3 percent of U.S. companies have senior leadership teams that represent the U.S. workforce. Racial pay gaps can be as high as 50 percent and gender pay gaps as high as 22 percent. Removing salary history could eliminate a barrier to entry for some applicants.
- Focusing on the job, rather than on past salary, is more productive for all parties. There are many factors that influence salary range, such as the value of the role, specific skills, and management experience. When salary history isn’t required, it encourages applicants to share pay expectations and explain why. This helps hiring managers assess each candidate.
- Removing salary history questions encourages candidates to highlight their value. When candidates know disclosing salary history is not required, it changes their approach. They will focus on the role, requirements, and the value they can provide to an employer. Some candidates have been underpaid, so past salary doesn’t always show their true value.
- Candidates will educate themselves on fair compensation. There are many free resources to help candidates assess their worth, which include local pay reports and online tools from Glassdoor. When candidates can justify an expected pay range, it streamlines negotiation.
Broader Implications Outside California
Lawmakers are starting to view salary history requirements as responsible for wage inequality. Oregon, Massachusetts, and Delaware also prevent employers from asking about salary history. Similar laws are being reviewed in about two dozen other states. Because of this trend, it’s wise to avoid using salary history to evaluate candidates.
Verified First’s compliance team accounts for these laws and many other state requirements, when conducting pre-employment screening. For example, our user-friendly screening portal does not allow Californian clients to request salary during data collection. For a demo of our portal and/or a free assessment of your screening efforts, please fill out the form below.
