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Prohibitions on Use of Salary History in Hiring.
Notice and Posting Requirements for Enployers.
Implementation and Enforcement.
Undertaking for the General Welfare.
This Article 33J shall be known as the “Parity in Pay Ordinance.”
(a) In San Francisco, women are paid on average 84 cents for every dollar a man makes, according to the 2015 United States Census Bureau report. Women of color are paid even less. African American women are paid only 60 cents to each dollar paid to men. Latinas are paid only 55 cents to each dollar paid to men.
(b) According to the National Committee on Pay Equity, the gender wage gap has narrowed by less than one-half a penny per year in the United States since 1963, when Congress passed the Equal Pay Act, the first law aimed at prohibiting gender-based pay discrimination.
(c) The problematic practices of seeking salary history from job applicants and relying on their current or past salaries to set employees’ pay rates contribute to the gender wage gap by perpetuating wage inequalities across the occupational spectrum. Women are paid less than men in 99.6% of the occupations and are more likely to face enduring financial losses for taking time out of the paid workforce due to childbearing and family caregiving responsibilities.
(d) When employers make salary decisions during the hiring process based on prospective employees’ current or past salaries or require employees to disclose current or past salaries as part of the application process or during salary negotiations, women applicants often end up at a significant disadvantage. In effect, to the extent employers consider applicants’ salary history in setting salaries of new hires, historical patterns of gender bias and discrimination repeat themselves, causing women to continue earning less than their male counterparts and less than they would have earned, but for their gender.
(e) In 2015, on Equal Pay Day, the Chair of the Equal Employment Opportunity Commission (EEOC) advised employers on important steps they could take to ensure equal pay for equal work, including eliminating “discriminatory pay gaps on the basis of prior salary” and the 2005 EEOC Compliance Manual states that “prior salary cannot, by itself, justify a compensation disparity.”
(f) In July 2015, the acting director of the Federal Office of Personnel Management provided guidance on advancing pay equality in the federal government, warning that reliance on salary history “could potentially adversely affect a candidate who is returning to the workplace after having taken extended time off from his or her career or for whom an existing rate of pay is not reflective of the candidate’s current qualifications or existing labor market conditions.”
(g) Courts also have warned against relying on salary history and have stated that prior salary cannot, by itself, justify a wage disparity. In Corning Glass Works v. Brennan, (1974) 417 U.S. 188, at 205, the United States Supreme Court held that a pay differential which “ar[ises] simply because men would not work at the low rates paid women . . . and reflect[s] a job market in which [the employer] could pay women less than men for the same work” is not based on a cognizable factor other than sex under the Equal Pay Act (Public Law 88-38).
(h) More recently, in its order in Rizo v. Yovino, Fresno County Superintendent of Schools, (Case No. 1:14-cv-0423-MJS (E.D. Cal. December 18, 2015), pp. 16-17), the federal district court denied summary judgment on defendant’s motion under the federal Equal Pay Act based on finding that, “a pay structure based exclusively on prior wages is so inherently fraught with the risk - indeed, here, the virtual certainty - that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand, even if motivated by a legitimate non-discriminatory business purpose.” The court went on to explain that, “say[ing] an otherwise unjustified pay differential between women and men performing equal work is based on a factor other than sex because it reflects historical market forces which value the equal work of one sex over the other perpetuates the market’s sex-based subjective assumptions and stereotyped misconceptions Congress passed the Equal Pay Act to eradicate.”
(i) Since women are paid on average lower wages than men, basing wages upon a worker’s wage at a previous job often serves to perpetuate gender wage inequalities and leaves families with less money to spend on food, housing, and other essential goods and services.
(j) In August 2016, the California State Assembly passed AB 1676 specifying that prior salary cannot, by itself, justify any disparity in compensation.
(k) Combatting gender discrimination by prohibiting consideration of an applicant’s current or past salary is emerging as an important policy for promoting gender equity in employee salaries. In August 2016, Massachusetts became the first state to enact a law prohibiting employers from seeking or requiring a prospective employee’s wage history.
(l) If an employer is able to ask a potential employee for their prior salary, it is unlikely that this information would not be a factor in negotiating or setting a salary offer.
(m) This Article 33J will help ensure that an individual’s prior earnings, which may reflect widespread, longstanding, gender-based wage disparities in the labor market, do not continue to weigh down a woman’s salary throughout her career.
(n) This measure will also help ensure that both employers and workers are able to negotiate and set salaries based on the qualifications of the person and the job in question, rather than on an individual’s prior earnings, which may reflect widespread, longstanding, gender-based wage disparities in the labor market.
“Applicant” shall mean a person applying for Employment to be performed in the geographic boundaries of the City and whose application, in whole or part, will be solicited. received, processed or considered, whether or not through an interview, in the City. “Applicant” shall not include a person applying for Employment with their current Employer.
“City” shall mean City and County of San Francisco.
“Employer” shall mean any individual, firm, corporation, partnership, labor organization, group of persons, association, or other organization however organized, which is required to be registered to do business in the City. “Employer” includes job placement and referral agencies and other employment agencies. “Employer” does not include any unit of local, state, or federal government, except that it does include the City.
“Employment” shall mean any occupation, vocation, job, or work, including but not limited to temporary or seasonal work, part-time work, contracted work, contingent work, work on commission, and work through the services of a temporary or other employment agency, for which the Applicant is to receive a Salary. Employment does not include work as an independent contractor.
“Inquire” shall mean any direct or indirect statement, question, prompting, or other communication, orally or in writing, personally or through an agent, to gather information from or about an Applicant, using any mode of communication, including but not limited to application forms and interviews.
“OLSE” shall mean the Office of Labor Standards Enforcement or any successor department or office. The “Director” of OLSE shall mean the head of OLSE.
“Salary” shall mean an Applicant’s financial compensation in exchange for labor, including but not limited to wages, commissions, and any monetary emolument.
“Salary History” shall mean an Applicant’s current and past Salary in the Applicant’s current position, or in a prior position with the current Employer or a prior Employer. Salary History shall not include any objective measure of the applicant’s productivity such as revenue, sales, or other production reports.
(a) An Employer shall not consider or rely on an applicant’s Salary History as a factor in determining whether to offer Employment to an Applicant or what Salary to offer an Applicant.
(b) An Employer shall not Inquire about an Applicant’s Salary History.
(c) An Employer shall not refuse to hire, or otherwise disfavor, injure, or retaliate against an Applicant for not disclosing his or her Salary History to the Employer.
(d) An Employer shall not release the Salary History of any current or former employee to that person’s prospective Employer without written authorization from the current or former employee unless the release of Salary History is required by law, is part of a publicly available record, or is subject to a collective bargaining agreement.
(e) Nothing in this Article 33J shall prohibit an Applicant from voluntarily and without prompting disclosing Salary History.
(f) Where an Applicant voluntarily and without prompting discloses Salary History to a prospective Employer, or provides written authorization pursuant to subsection (d) above, nothing in this Article 33J shall prohibit that Employer from considering that voluntarily disclosed Salary History in determining Salary for such Applicant or verifying such Applicant’s Salary History. Salary History by itself shall not be used to justify paying any employee of a different sex, race or ethnicity less than such Applicant or prospective employee for doing substantially similar work under similar working conditions, in accordance with California Labor Code Section 1197.5.
(g) An Employer may, without inquiring about Salary History, engage in discussion with the Applicant about the Applicant’s expectations with respect to Salary, including but not limited to unvested equity or deferred compensation or bonus that an Applicant would forfeit or have cancelled by virtue of the Applicant’s resignation from their current Employer.
(h) Nothing in this Article 33J shall prohibit an Employer from verifying non-Salary related information disclosed by the Applicant or from conducting a background check provided that if such verification or background check discloses the Applicant’s Salary History, the disclosed Salary History shall not be considered for purposes of determining the Salary to be offered to the Applicant during the hiring process or whether to offer Employment to the Applicant.
(a) The OLSE shall, by no later than the operative date of this Article 33J, publish and make available to Employers, in English, Spanish, Chinese, and all languages spoken by more than 5% of the workforce in San Francisco, a notice suitable for posting by Employers in the workplace informing Applicants and employees of their rights under this Article. The OLSE shall update this notice on December 1 of any year in which there is a change in the languages spoken by more than 5% of the workforce in San Francisco.
(b) Employers shall post the notice described in subsection (a) in a conspicuous place at every workplace, job site, or other location in the City or on City property, under the Employer’s control and frequently visited by their employees or Applicants, and shall send a copy of this notice to each labor union or representative of workers with which the Employer has a collective bargaining agreement or other agreement or understanding, that is applicable to employees in the City or on City property. The notice shall be posted in English, Spanish, Chinese, and any language spoken by at least 5% of the employees at the workplace, job site, or other location at which it is posted.
(a) The OLSE is authorized to take appropriate steps to enforce and coordinate enforcement of this Article 33J, including the investigation of possible violations of this Article.
(b) An employee or Applicant may report to the OLSE any suspected violation of this Article within 180 days of the date of the suspected violation. The OLSE shall encourage reporting pursuant to this subsection (b) by keeping confidential, to the maximum extent permitted by applicable law, the name and other identifying information of any person reporting the violation; provided, however, that with the authorization of such person, the OLSE may disclose the name and identifying information as necessary to enforce this Article.
(c) Where the OLSE determines that a violation has occurred, it may issue a determination; provided however, that for a first violation occurring any time, or for any violation occurring from July 1, 2018 through June 30, 2019, the OLSE must issue a warning and notice to correct. Starting July 1, 2019, for any subsequent violation other than a first violation (including a first violation occurring before that date), the OLSE may impose an administrative penalty of no more than $100 that the Employer must pay to the City for each employee or Applicant as to whom the violation occurred. Thereafter, for subsequent violations occurring within 12 months of that violation, the penalty may increase to no more than $200 for the second violation, and to no more than $500 for each additional violation. The penalty shall be payable to the City for each employee or Applicant whose rights were violated.
(d) Where the OLSE determines in its sole discretion that prompt compliance is not forthcoming, the OLSE may refer the action to the City Attorney, who may initiate a civil action pursuant to subsection (j).
(e) OLSE may initiate an administrative enforcement action for any suspected violation of this Article within one year of the date the suspected violation occurred.
(f) If multiple employees or Applicants are impacted by the same violation (e.g., all Applicants for a certain job opening are asked for their Salary History information on the initial application), OLSE shall have discretion to treat those violations as a single violation rather than multiple violations.
(g) By no later than the operative date of this Article, the Director of OLSE shall establish rules governing the administrative process for determining and appealing violations of this Article. The rules shall include procedures for:
(1) Providing the Employer with notice that it may have violated this Article;
(2) Providing the Employer with a right to respond to the notice;
(3) Providing the Employer with notice of the OLSE’s determination of a violation; and,
(4) Providing the Employer with an opportunity to appeal the OLSE’s determination to a hearing officer, appointed by the Controller or the Controller’s designee.
(h) If there is no appeal of OLSE’s determination of a violation, the absence of an appeal shall constitute a failure to exhaust administrative remedies, which shall serve as a complete defense to any petition or claim brought by the Employer against the City regarding OLSE’s determination of a violation.
(i) If there is an appeal of OLSE’s determination of a violation, the hearing before the hearing officer shall be conducted in a manner that satisfies the requirements of due process. In any such hearing, the OLSE’s determination of a violation shall be considered prima facie evidence of a violation. The hearing officer’s decision of the appeal shall constitute the City’s final decision. The sole means of review of the City’s final decision, rendered by the hearing officer, shall be by filing in the San Francisco Superior Court a petition for writ of mandate under Section 1094.5 of the California Code of Civil Procedure. OLSE shall notify the Employer of this right of review after issuance of the City’s final decision by the hearing officer.
(j) Civil Enforcement. Following OLSE’s referral pursuant to subsection (d), the City may bring a civil action in a court of competent jurisdiction against the Employer violating this Article, and, upon prevailing, shall be entitled to such legal or equitable relief as may be appropriate to remedy the violation.
(k) Interest. In any administrative or civil action brought under this Article, OLSE or the court, as the case may be, shall award interest on all amounts due and unpaid at the rate of interest specified in subdivision (b) of Section 3289 of the California Civil Code.
(l) Remedies Cumulative. The remedies, penalties, and procedures provided under this Article are cumulative.
(m) Limitation on Actions. Civil actions to enforce this Article must be filed within one year after the date of the violation. This limitations period shall not commence until the date the violation was discovered or could reasonably have been discovered.
(n) A violation of this Article 33J shall be an infraction.
In enacting and implementing this Article 33J, the City is assuming an undertaking only to promote the general welfare. It is not assuming, nor is it imposing on its officers and employees, an obligation for breach of which it is liable in money damages to any person who claims that such breach proximately caused injury.
If any section, subsection, sentence, clause, phrase, or word of this Article 33J, or any application thereof to any person or circumstance, is held to be invalid or unconstitutional by a decision of a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions or applications of this Article. The Board of Supervisors hereby declares that it would have passed this Article and each and every section, subsection, sentence, clause, phrase, and word not declared invalid or unconstitutional without regard to whether any other portion of this ordinance or application thereof would be subsequently declared invalid or unconstitutional.