Salary Inquiries Off Limits in San Francisco

Written by Erica Parks

Last month, San Francisco Mayor Ed Lee signed the “Parity in Pay” Ordinance, making San Francisco the latest in a growing number of cities and states that have enacted legislation prohibiting employers from asking job applicants about their salary histories. The ordinance, the full text of which is available here, takes effect July 1, 2018 (penalties for violations will be available starting July 1, 2019). Under the new law, employers will be prohibited from:

  • Asking about an applicant’s current or prior salary;
  • Considering or relying on an applicant’s salary history in determining whether to make a job offer or what salary to offer;
  • Refusing to hire or otherwise retaliating against an applicant for refusing to disclose their salary history; and
  • Releasing the salary history of a current or former employee  without written authorization unless such information is required to be disclosed by law, publicly available, or subject to a collective bargaining agreement.

However, employers may discuss an applicant’s salary expectations and any benefits they would have to forfeit in order to take the new job (e.g., unvested equity or deferred bonus compensation). Further, when an applicant voluntarily discloses salary history without prompting by the employer, the employer may consider such information. Of course, pursuant to California Labor Code 1197.5, such history by itself cannot be used to justify paying such applicant less than an employee of a different sex, race, or ethnicity for doing substantially similar work under similar working conditions. Click here to view our previous alert.

Scope

The new law will apply to all employers who are required to register to do business in San Francisco, including city contractors and subcontractors, regardless of size. The protections of the new ordinance cover any person applying for any type of job for wages, including temporary, seasonal, and commissioned work (except work as an independent contractor), to be performed in the City.

Notice and posting

The law instructs the City’s Office of Labor Standards Enforcement (OLSE) to create a notice that employers must post in a conspicuous location. The OLSE is expected to provide more details about the notice and posting requirement before the law goes into effect on July 1, 2018.

Penalties

Starting on January 1, 2019, penalties may be charged ranging from $50 to $500 per applicant per violation (between $50 and $100 per violation for City contractors along with potential termination of their contract and forfeiture of moneys due thereunder).

Similar legislation

As we previously alerted you, New York City and Massachusetts also have passed legislation prohibiting employers from inquiring about applicant salary histories. In addition, Philadelphia, Delaware, and Oregon all have passed similar legislation. And if it is enacted, Assembly Bill 168 would add California to these growing ranks (A.B 168).

Employers in these jurisdictions should review their employment practices and hiring materials and remove any salary questions, update their interviewing and hiring policies and procedures, and train hiring managers and interviewers to ensure that they observe these laws in their conversations with applicants.

Please contact MSK if you would like to discuss whether changes to your recruiting or pay practices are advisable for your business.

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