Not since 1986, when one of the writers of this alert served on the California Comparable Work Task Force, has California focused so much attention on pay equity. 

On October 6, 2015, Governor Jerry Brown signed into law the California Fair Pay Act (SB 358, Senator Hannah-Beth Jackson), to close wage differences between men and women. Unanimously adopted by the legislature − and with the surprising support of the California Chamber of Commerce − the bill’s signing ceremony took place at Rosie the Riveter National Park in Richmond.

Existing law already prohibits employers from paying women less than men in the same establishment for work that requires equal skill, effort and responsibility and performed under similar working conditions, but this requires the state to investigate and prosecute these allegations.   

The California Fair Pay Act now transforms equal pay into pay equity with these additional requirements:

  • No more “same establishment” limitation: eliminates wage differentials in the same worksite or locality, although regional differences based on cost of living differences are acceptable
  • “Substantially similar” replaces “equal” work standard: prohibits an employer from paying any of its employees at wage rates less than those paid to employees of the opposite sex for substantially similar work, based on a composite of skill, effort and responsibility
  • Employer has affirmative duty to show bona fide factors responsible for wage difference:  revises and recasts the exceptions to require the employer to affirmatively demonstrate that a wage differential is based upon one or more specified factors, including a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than sex
  • Employer to demonstrate reasonable application of factors:  requires the employer to demonstrate that each factor relied upon is applied reasonably, and that the one or more factors relied upon account for the entire differential
  • Civil action:  authorizes an employee who has been discharged or discriminated or retaliated against, in the terms and conditions of his or her employment  for exercising these rights to recover, in a civil action, reinstatement, reimbursement for lost wages and work benefits, interest thereon, equitable relief , attorneys’ fees and costs
  • Employee right to disclose, inquire, discuss and organize around wages: allows a private right of action for  prohibiting an employee from disclosing his/her own wages, discussing the wages of others, inquiring about another employee’s wages, or aiding or encouraging any other employee to exercise his or her rights under these provisions. Such prohibitions are already considered an unfair labor practice under the National Labor Relations Act
  • Extended recordkeeping: increases the duration of employer recordkeeping requirements to three years

SEVEN STEPS FOR EMPLOYERS

Effective January 1, 2016, employers should prepare to:

  1. Conduct or review job evaluations of substantially similar jobs based on a composite of skill, effort, and responsibility system wide
  2. Ensure that any wage differences can be explained by seniority, merit, quantity or quality of production, or another bona fide factor other than sex
  3. Document that the bona fide factors for wage differences are reasonably applied
  4. Add the Fair Pay Act to policies, procedures and handbooks prohibiting non-discrimination and retaliation
  5. Eliminate any policies and procedures prohibiting disclosure or discussion of, inquiry or organizing about wages
  6. Update recordkeeping to at least three years
  7. Train managers, supervisors, human resources professionals and others in the enterprise on compliance with the California Fair Pay Act