BE CAREFUL WHAT YOU ASK FOR!
New Wage Discrimination Ammunition Effective Jan. 1, 2017
On September 30, 2016 Governor Brown signed into law an amendment to the California Labor Code that effectively makes it unlawful to ask candidates for employment about their prior wage history. The purpose of the legislation is to target wage discrimination. The legislative history indicates that the bill authors were primarily concerned about wage discrimination against women, however, it does not say it applies only to women. The law says only that salary cannot be based on past income – not that asking for past income is illegal, but the legislative history has the effect of making it illegal because it can be used in court to show the intent of the law.
Although this legislation is a California law, the legislative history cites federal case law arising out of the Equal Pay Act, so it should be considered a potential issue even for dealerships outside of California. California law is also often cited to support new court decisions in other states.
Damages for violation of the new law equal the amount of deprived wages, plus interest, plus liquidated damages in the same amount – in other words, double damages.
How do you protect your business? Make sure everyone who is interviewing candidates for employment knows not to ask about prior salary history. Take any request for prior wages out of job applications.
What can you ask for? You can ask what pay prospective employees would like to receive. You can also ask them why they think they are worth that amount of pay. If they tell you their prior salary without you having asked, it is okay as long as you don’t base their pay on the history. Keep a record of the reason for the salary decision and make sure it is not based on salary history.
There are criteria spelled out in the Code that justify disparate pay between similarly situated employees. If the wage differential is based on any of the following, it is considered legal:
- A seniority system.
- A merit system.
- A system that measure earnings by quantity or quality of production.
- A bona fide factor other than gender, such as education, training or experience that is job related.
The factors relied upon must be applied reasonably and account for the entire wage differential.
What should you do if you realize you are already violating this law? There are ways to make up the difference and obtain a waiver of the violation, with the approval of the Division of Labor Standards. Maintain all of your wage records for at least three years. This Code Section can be enforced by an action taken by the Division of Labor Standards. A civil action can be commenced no later than two years after the cause of action occurs, unless the action is shown to be willful, then the filing can be up to three years after the offense.
The Obama Administration signed an executive order requiring all employers with over 100 employees to report to the government how much they pay their employees, broken down by gender, race and ethnicity. Although it seems likely that this Executive Order will be overturned with the stroke of a pen once President-elect Trump takes office, even if he does erase the reporting requirement, the Equal Pay Act of 1963 and the new California law still remain. Be careful what you ask for!