Understanding California’s New Pay Equity Law, compensation

Understanding California’s New Pay Equity Law

Here’s what every business owner should know about the California law that is calling for equal compensation for all workers.

Recently, many states and municipalities have taken it upon themselves to enact their own version of pay equity laws.  In California, the guidelines laid out in Assembly Bill 168 signed by Governor Jerry Brown a year ago have recently been clarified in the new Assembly Bill 2282.  In general, this bill mandates that businesses cannot offer unequal compensation to new or existing workers of different sex, race, or ethnicity.  While the bill does examine some exceptions for seniority, training, and experience, employers will have to carefully check that their compensation offerings are within compliance.  Here are some of the more confusing or murky portions of the bill explained for the benefit of business owners in the state of California and nationwide.

“Reasonable Request”

Assembly Bill 168 stated that employers were required to provide applicants with a pay scale corresponding to the position when a “reasonable request” was made.  Assembly Bill 2282 clarifies that a reasonable request is one that is made after the application and initial interview processes.  Additionally, this request can only be made by individuals who are not already working at the company.

Interview Questions

AB 2282 also explains which questions an employer can ask during the interview process.  In the past, any salary information that an applicant disclosed without prompting could be used to determine in their new position.  The new bill clarifies that employers can ask applicants for their salary expectations for the position without this being considered “prompting.”  Additionally, when it comes to existing employees of the company, the bill states that employers can use salary history to make new compensation decisions.

Bottom Line

With California just one of the 18 states with pay equity laws in place, it’s important that business owners across the nation take note.  Even if your state does not require you to offer equal compensation to your workers, you should be proactive and start applying these expectations to your company sooner rather than later.  This move will help you place your brand ahead of your competitors and at the forefront of this salary trend.

For assistance with crafting a progressive compensation strategy for your company, contact the experts at McKnight Associates, Inc.  We are ready to offer you hands-on human resources consulting for colleges, universities, medical centers, and organizations of all sizes.