If you were overpaid, and want to try to keep being overpaid, see below for a scenario that you can mentally adjust from fixing underpayment to preserving overpayment (in which case verification is even more important if the employer decides to bite that bullet).
Underpayment of disadvantaged colleagues is so much more common and so much more long-term impactful than overpayment of anyone involved in this style of negotiation; I care more that the law addresses the former than that it prevents the latter. People have useful indirect ways to signal high pay anyway even if they were forbidden from saying it explicitly, far more than underpaid people.
The prior pay information is illegal for employers to solicit in these jurisdictions, even if they are willing to make it voluntary by accepting no for an answer. The only way the info will make it to a law-abiding California employer is if the candidate decides it's to their advantage to volunteer it, as they probably would if the initial offer is a low-ball. If the candidate doesn't volunteer it unsolicited, the info can't legally come up (and if it somehow does [e.g. turns up in a third party background check] the employer can't use the info during the hiring process).
As for why that needs to be allowed, consider this scenario:
Company: What salary are you looking for?
Candidate: Market rate.
Company: How about $X? We like you and it's the highest we usually offer for this position to a new hire.
Candidate: Hm. While I agree $X is within the market rate range, I currently make $X+10k which is also within that range. Can you at least match that?
Company, after consideration: Hm. Yeah given that we don't want to force you to take a pay cut, we'll make that exception.
Or, even more compelling last two lines:
Candidate: Hm, my current company is already paying me $X, and has been doing so for 3 years now despite my skills growing significantly in that time. Can you recognize that growth with a modest pay raise?
Company, after consideration: Hm, we realize you won't trust our willingness to support you if we keep your compensation stagnant for a fourth year and counting. We can't break our salary band, but we'll at least give you $10k/year extra in restricted stock units [assume a public company].
In such scenarios, verification makes sense to require and allow.
Also note that these jurisdictions generally have explicit bans on paying differentially based on protected attributes like old age or gender, and that these laws about salary history (which are just a tightening of their former greater permissiveness that still prevails elsewhere) don't override those rules.
1. Bob voluntarily supplies paystub for his last job.
2. Fred gives no hint about his previous salary.
Other things being equal, which is the less risky hire?
I.e. don't be too surprised if the law doesn't work out as intended.
Other things being equal, neither Bob nor Fred is more likely to be a liar. Should I want to verify salary history, I'd seek permission to verify directly with the former employer (a routine request for any HR department assuming employee consent). If anything, it might feel suspicious that Bob was proactively trying to give me the easier form of proof to render fraudulent; but that alone wouldn't seem concerning in the absence of other signals, I expect.
Note that before the new law, the employer could legally have insisted that both Bob and Fred give their salaries or refuse to consider them. If Fred was severely underpaid and Bob was not, the employer would almost certainly have given Fred a lower offer than Bob. Since persistent underpayment also correlates with a more precarious personal financial situation, and since any other employer could legally have insisted on the same policy, Fred would probably have ended up accepting a comparatively low-ball offer for lack of a better option, thus staying underpaid.
The law still helps.
Because the person not giving salary information likely believes such will negatively affect their offer (as you say), and the one who does likely believes it will positively affect their offer.
Sure, a lower salary may have nothing to do with job performance. But it is an indicator, and a good one.
BTW, paystubs are "stubs" because they are on the same paper as the check which is more difficult to forge.
> The law still helps.
Not providing salary info makes one a riskier candidate, and risk means a lower offer.
It's like buying a car. The less you know about the car's condition, the less you're likely to be willing to pay for it. That's why having receipts for work done on the car by a reputable shop, being the original owner, owner is a grandma rather than a teenager, etc., commands a higher price for the car.
I mean, sure the correlation is nonzero, but it's low enough as to not be usefully predictive for hiring. The correlation is much higher between relative pay and relative privilege, which is not at all about who would be a good employee.
Also, most of my pay stubs throughout my recent career have actually been electronic-only pay statements, and my pay is usually electronically direct-deposited too.
Therefore, any employer-provided pay statement which I pass along would be in the original PDF form, printed from the original, or redacted in a visible and non-fraudulent way by me to remove any irrelevant sensitive info (e.g. before the accepted offer stage I might redact any full bank account number or SSN).
If I were a fraudster, the modified PDF I would share would look just as credible as the original. Far safer to just obtain permission and ask the former employer.