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California’s New Employment Laws

Two bills were signed into law last week by California Governor Jerry Brown that will impact the hiring process for employers, including small businesses, statewide. The new laws, which will take effect on January 1, 2018, prohibit employers from asking job applicants about their previous salary and set requirements regarding criminal background checks. While the salary privacy law will impact both government and non-government employers, the criminal background check requirement applies to non-government employers only.

What will these laws help to do?

The salary privacy law, Assembly Bill 168, was created in hopes of reducing the gender wage gap that we see across the nation. The law, which takes effect on January 1, 2018, will prohibit employers from requesting salary history from job applicants of any gender. As a result, employers won’t be able to rely on salary history to determine what compensation to offer, potentially leveling the playing field for those who have historically been underpaid.

The Assembly Bill 1008 also takes effect on January 1, 2018, and will prohibit employers from inquiring about or considering a job applicant’s conviction history prior to an offer of employment. According to the National Employment Law Project, one in three Californians have a conviction or arrest record that shows up on their background check. This law was created to give everyone an equal chance of employment based on their skill sets and experience and not by what they have done in the past.

How can this affect small businesses in California?

Small business sometimes are not able to match the pay of larger corporations and will use salary history to find a way to compensate a person with other benefits. An employer is still able to ask what the applicant’s salary expectations are. However, instead of relying on the applicant to provide their salary history, it’s always a good idea to investigate what other companies in your area are paying for the position you are hiring. It never hurts to find a way to provide a good benefits package, as well. By discussing the expected salary range and benefits package, employees and applicants will waste less time on opportunities that aren’t a good fit.

As for background checks, business owners are allowed to inquire about criminal history after the position has been offered to the applicant. Once the background check has been returned, the employer will need to assess whether the criminal history is going to affect the position that was offered.

  • The items to consider are:
  • The nature and gravity of the offense or conduct
  • The time that has passed since the offense or conduct and completion of the sentence
  • The nature of the job held or sought

After the assessment has been done and the employer decides that the applicant is disqualified based on their history, the employer will need to notify the applicant by written notice. The employer may include the reason why but does not have to. The applicant will have five business days to counter the letter.

What should job applicants keep in mind if you’re applying for jobs when this new law takes effect?

Applicants will still able to freely volunteer any information on prior salary and benefits, and by doing so, employers can consider previous compensation in their offers. The new law will also require that employers provide applicants, upon the applicant’s request, a salary range for the jobs they are seeking.

Applicants who have a conviction history do not have to freely provide this information during the initial interview. That said, if the position is offered, it may be helpful to proactively address what may be found on the background check. If the employer does send a written notice of disqualification to the applicant, the applicant will have five business days to respond to the notice and dispute inaccuracies. Assembly Bill 1008 does not apply to a position for which an employer is required by any state, federal, or local law to conduct criminal background checks for employment or restrict employment based on criminal history.

What should employers do to prepare?

  • Revise your employment applications and remove any request for previous salaries or conviction history. You can create a new Employment Application with Rocket Lawyer
  • Do not ask any interview questions regarding salary history or criminal background
  • Have a pay scale available for all roles that you are hiring
    • Make starting salaries, benefits, and raises as a part of a fair formula
    • Define the factors that determine salary, promotions, and bonuses
  • Train employees on:
    • Regulatory compliance issues
    • The appropriate compensation questions that can be asked during an interview
    • How to respond to the request for a pay scale
    • How to effectively use the volunteered information regarding salary and conviction past

If you have any questions regarding labor and employment law, Rocket Lawyer is here to help. Ask a lawyer any question and receive a personalized answer. You can also update your Employment Application or check out our help center for employers.

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