Is California moving toward completely 'blind' hiring?

Is California moving toward requiring completely "blind" hiring? While some social science studies have shown that removing all markers of gender and ethnicity from resumes - including applicant names -significantly reduces disparate impacts, the state is still far from requiring such drastic changes.

However, there is a bill before the California Legislature that takes a small step in that direction. Assembly Bill 168, a bill introduced in January by Assemblywoman Susan Talamantes Eggman (D-Stockton), would prohibit California employers, including public sector employers, from requesting information about a job applicant's salary history or benefits. The bill also requires private sector employers to provide salary information about the job to candidates upon request. Although this requirement does not apply to public employers, salary information for public employees falls under the disclosure requirements of the California Public Records Act.

The proposed legislation, which recently passed out of the Labor and Employment Committee and is now before Appropriations, is an effort to counteract the history of pay inequity between men and women. Its supporters believe that employers who base salary offers on an applicant's salary history may be perpetuating the disadvantages that women have historically faced in the workforce. Despite decades of legislation aimed at ending those disadvantages, women in California and nationwide still earn less than their male counterparts on average. According to the Bureau of Labor Statistics, the median weekly earnings for women working full time in California is 84.8 percent of the median earnings for men. On an annual basis, that means a gap of about $7,000 per woman, or an estimated $39 billion statewide. According to Eggman, "[U]sing salary history as a baseline just reinforces the inequity. There are women entering the workforce today who could be behind for decades if we don't end this practice."

Along with recent changes to California's Equal Pay Act, AB 168 is part of a greater effort to move past simply prohibiting intentional discrimination and toward addressing the historic and structural impediments to gender equity. Amendments to the Equal Pay Act that went into effect in January 2016 made it significantly more difficult for employers to defend against claims of unequal pay based on gender. That legislation narrowed the category of "bona fide factors other than sex, such as education, training, or experience" that an employer can use to justify differences in pay for substantially similar work. As amended, the act requires an employer relying on a "bona fide factor" to show that the asserted factor is job-related, consistent with business necessity, and not "based on or derived from a sex-based differential in compensation." In January of this year, a further change went into effect explicitly prohibiting employers from using pay history as the sole justification for disparities in pay.

Several other state and local jurisdictions have adopted prohibitions on employers seeking salary history, including Massachusetts, whose statute takes effect July 1, 2018, Puerto Rico, which enacted legislation in March, Philadelphia and New York City. Some 20 additional jurisdictions are considering similar legislation.

In contrast, cases brought under the federal Equal Pay Act appear to be moving in the opposite direction. On April 27, the 9th U.S. Circuit Court of Appeals issued a decision in Rizo v. Yovino, 2017 DJDAR 3992, reaffirming its 1982 decision in Kouba v. Allstate Insurance Co., which held that under the federal Equal Pay Act, salary history may be considered a bona fide factor other than sex, so long as it "effectuated some business policy" and was used "reasonably in light of [its] stated purpose as well as its other practices." In Rizo, the court took that reasoning a step further, holding that salary history, standing alone, may constitute a bona fide reason for pay disparity other than sex, so long as it serves a legitimate business purpose.

Given the heightened risk of Equal Pay Act claims under state law, and the prohibition against using pay history as a bona fide justification for pay disparities, California employers are already better off not seeking such information from applicants. AB 168, if it passes, may simply turn what is advisable into a requirement.