How Does AB 168 Affect You?

How does AB 168 affect you? Employers need to be aware of this new California law that goes into effect very soon. Imagine going to the grocery store and seeing a sign that says, “From now on, NO prices may be posted. Take your best guess! GOOD LUCK! The Management.” That would complicate future purchasing decisions, wouldn’t it?

Get Ready to Start Guessing

Choosing grocery items is far simpler than selecting candidates to hire. Yet, beginning January 1st, 2018, California will be among a very few states to legislate questions employers may ask of candidates regarding their current and past compensation. In an effort to level the playing field and inhibit the practice of wage discrimination, the State of California has signed into law AB 168.

How Does AB 168 Affect You?

What aren’t you allowed to ask? Simply put, this new law prohibits an employer or an agency from inquiring about or seeking an applicant’s salary history, including compensation or benefits. The statute goes on to say that employers may not rely upon salary history as a factor in determining whether to offer employment. Unfortunately while California legislators have enacted this statute, they have yet to provide any guidance as to its implementation.

It is important to note that applicants may voluntarily disclose their salary, in which case the employer may consider past salary in determining salary for that applicant.

Since this statute applies to employers of all sizes, there are some practical steps many organizations will have to take immediately. For example, many companies have questions in their applications asking for this exact information. These questions will need to be removed.

What You Can’t Ask

What did you make at your last job?
What was your benefits package at your last position?
What was your total compensation?

What You Can Say

More to the point, how will you as an employer navigate this dance regarding compensation? Surely you wouldn’t wait until you decide to make an offer to bring up the topic of compensation…would you? Of course not! We have some recommendations that may help until additional guidance is provided:

Ensure that applicants know what the compensation range is for the position for which they are applying. (The law actually says that an employer, upon reasonable request, shall provide the pay scale for a position to an applicant applying for employment.)
Ask candidates to share specifically what their compensation expectations are. Notice that this is different from asking them for their salary history, which you cannot legally ask them to provide, verbally or in writing.
Early in the candidate process, ask candidates if the compensation range you’ve specified for this position is acceptable to them.
Early in the process, ask candidates what benefits they expect in this position.
Train every team member who will be conducting interviews, from HR staff to hiring managers, about AB 168’s restrictions and what is allowable to ask.

This is a candidate’s market, meaning that we’re almost always talking to candidates who are currently working. They also may currently be considering other offers. The candidates we’re interested in pursuing are those who would consider moving only if it makes sense for their career. (This distinguishes Amtec from other recruiting companies. We turn candidates away who don’t meet this criteria, for the benefit of our clients.)

Having said that, the decision to move almost always includes a financial element. At some point, there will be a discussion about whether the offered compensation meets the candidate’s expectations. That expectation will have some basis in the candidate’s current compensation, as well as in what he or she believes about his or her worth in the free market.

How does AB 168 affect you? In the end, this effort to inhibit wage discrimination may do more harm than good. Ironically, it is generally in a candidate’s best interest to share salary and benefit history early on because it can avoid an unnecessary investment of your time and theirs. Today’s professional candidates are already savvy about what they’re worth, and the earlier this conversation takes place, the better. An ongoing effort will need to be made to educate candidates in this regard. But for now, this new law is what we all must follow. It’s up to us to make the best of it.

Do you need help acquiring top contract or direct hire professionals? Let Amtec help you navigate the latest legal issues, find top candidates, set you up to successfully interview them, and assist with offer negotiations, reference checks, and background checks. Click here or call (714) 993-1900 to start your search.

Scott Kuethen