California employers, prepare yourselves (again). The State has added a larger arrow to the plaintiff’s quiver – more equal pay.

Decades before the Lily Ledbetter Fair Pay Act was implemented, California had a comparable equal pay statute in place. Enacted in 1949, the California Equal Pay Act (“Old Act”) provided equal pay protections to the opposite sex. But, the Old Act did not age well, its flaws uncovered. Critics bemoaned the Old Act’s limitations, including a difficult burden of proof, ambiguous affirmative defense, and the lack of an anti-retaliation provision found in other employment statutes. The time had come for change.

In October 2015, California’s Governor Jerry Brown signed the California Fair Pay Act (S.B. 358), which amends California Labor Code § 1197.5, and becomes effective on January 1, 2016 (“New Act”). The New Act corrects the perceived weaknesses in the Old Act.

Easier Burden of Proof

The Old Act prohibits employers from paying wage rates less than those paid to employees of the opposite sex for:

“equal work on jobs the performance of which requires equal skill, effort, and responsibility.” The New Act lightens this burden, requiring only that a plaintiff prove less pay for “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.”

This expanded language will lead to expanded discovery and a fight over the meaning of “substantially similar.”

The Old Act limited the comparable wage rates to those “in the same establishment,” which was interpreted to mean the same work site. The New Act broadens the comparison by eliminating the “same establishment” limitation. Thus, a plaintiff may seek and use evidence of wage rates paid to the opposite sex at work sites other than plaintiff’s. The impact on discovery will be significant, and you can imagine the anticipated disputes over the geographical scope of discovery requests.

More Difficult Affirmative Defenses

The Old Act permitted a defense to disparate pay based upon a “bona fide factor other than sex,” which was criticized for being ambiguous and overly broad. The New Act clarifies and limits the affirmative defenses, requiring the employer to prove that each enumerated factor (e.g., seniority system, merit system, etc.) is applied reasonably and that one or more factors account for the entire pay differential.

Anti-Retaliation

The Old Act did not shield employees from employer retaliation after inquiring about co-workers’ pay in order to invoke the protections of the Old Act. The New Act expressly prohibits employers from retaliating or discriminating against employees who, for the purpose of invoking the New Act’s protections, disclose their own wages, discuss co-workers’ wages, ask about co-workers’ wages, or encourage or aid co-workers in their exercise of rights thereunder.

What does this mean for employers as we head towards 2016 (and the effective date of the California Equal Pay Act)? Now is the time to conduct an audit of your employee compensation data and be thinking of the following questions:

  • (a) Is there a gender-correlated discrepancy in pay in your company among substantially similar work, regardless of location?
  • (b) If there is a discrepancy, can you prove the New Act’s affirmative defenses to explain the discrepancies?

It might be better to correct the discrepancies now, than face your employees and their attorneys, armed with the New Act, come January 1st.