A few months ago, the California State Assembly introduced AB 1676, a bill that not only would have prohibited employers from asking job applicants about their compensation history, but also would have required employers to provide pay scale information upon reasonable request. A nearly identical bill passed through the Assembly and Senate before it was vetoed by the Governor toward the end of last year. In his veto statement, the Governor expressed concern that such a measure “broadly prohibits employers from obtaining relevant information with little evidence that [it] would assure more equitable wages.”

As we previously reported, the Fair Pay Act (the “FPA,” Labor Code § 1197.5) requires “equal pay for substantially similar work” based on the employee’s skill, effort and responsibility, and similar working conditions. To the extent a disparity exists between employees of the opposite sex, it must be reasonably based on one or more the factors enumerated within the statute.

Perhaps hoping to avoid repeating history, proponents of AB 1676 have taken a new approach. In place of the provision prohibiting inquiries about prior salary history is new language that amends the FPA to state that “[p]rior salary shall not, by itself, justify any disparity in compensation.”

The concern with salary history is based on the notion that reliance on prior salary information contributes to continuing gender inequality. Reliance on prior salary, according to the author of AB 1676, perpetuates pay disparities: “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.” Indeed, as provided in AB 1676’s legislative findings and declarations, “[w]hen employers make salary decisions during the hiring process based on prospective employees’ prior salaries or require women to disclose their prior salaries during salary negotiations, women often end up at a sharp disadvantage and historical patterns of gender bias and discrimination repeat themselves, causing women to continue earning less than their male counterparts.”

The proposed change to the FPA mimics guidance currently found in the Equal Employment Opportunity Commission’s Compliance Manual, which states that consideration of prior salary is permissible where (1) that consideration is not based on sex and (2) another factor along with prior salary accounts for the difference in compensation. However, the bill analysis that accompanies AB 1676 makes no mention of the EEOC’s guidance and, in fact, indicates that a strict reading of the amendment to the statute “would prohibit any consideration of salary history.” We will continue to monitor this bill as it makes its way to the Governor’s desk.