On October 12, California Governor Jerry Brown signed into law a measure that prohibits employers from using salary history at prior jobs to determine starting pay for applicants. The law will also require California employers to provide applicants with a pay range for the position sought upon request. Applicants could voluntarily disclose salary history information during the hiring process, and this information could then be used by the employer in setting initial pay.
The new California law responds to arguments that setting pay based on salary at a prior job perpetuates past wage inequities, especially those based on gender. If an employer bases starting salaries on how much an employee earns at their current job, and if women in general make less than men employed in comparable positions, the salary history then transfers this discrepancy to the new employment relationship.
While this law only affects California employers and employees, it could be used as a model by other states seeking to address pay equity issues. Even in states without such laws, employers should be ready to address questions over salary discrepancies based on business factors other than prior pay, such as experience, expertise, and market wage information.