Effective January 1, 2016, California’s new Fair Pay Act requires employers to pay men and women equally for “substantially similar” work and places the burden on management to prove it has done so. Those who violate the law could be required to pay back pay plus interest, as well as an equal amount as liquidated damages, and attorney’s fees. In addition, the Act prohibits employers from retaliating against workers who discuss their pay or seek information about the pay of others.
Before implementation of the Act—which was signed into law by Gov. Jerry Brown (D) in October 2015—employers were prohibited from paying different wages to employees of the opposite sex in the same establishment for equal work. And, employees were the ones who bore the onus of proving an equal pay violation.
In the new Act, the California Legislature explains that women in California earn an average of 84 cents for every dollar earned by men. The Act attempts to bridge this gap by broadening the type of work that requires equal pay. Unlike the prior “equal work” rule (which still prevails in the federal Equal Pay Act), the Act’s “similar work” requirement mandates that men and women receive equal pay even if their job titles are different and even if they work in different locations. Just how broad the “similar work” requirement is interpreted, however, remains to be seen.
To ensure compliance with the law, employers will certainly need to consider auditing their payroll practices. Such audits, while important, will also prove to be difficult due to the vast array of information needed to group “similar” jobs, determine whether legitimate factors (e.g., seniority, experience, education) are at play, and analyze whether any pay disparity is actually caused by an employee’s gender. Lastly, employers in California should expect to face more litigation under the Act, as the more flexible—and less defined—“similar work” requirement is likely to spur more employee scrutiny than its “equal work” predecessor.