California’s new fair pay act

Governor Jerry Brown signed the Fair Pay Act on October 6, 2015.  This new legislation amending California’s Fair Pay Act Cal. Labor Code §1197.5 is an ambitious attempt to close the salary gap between men and women in the same establishment with “substantially similar” work rather than just the “same jobs.”  The new legislation furthers protection of employees who complain of violations by closing certain loopholes that prevented the enforcement of the existing law.  Male and female employees are required to receive equal pay despite differing job titles, and despite working at a different location for the same employer.  This law also protects employees who ask about and/or discuss wages of other employees from retaliation by the employer.

With the new legislation, employers are required to prove that differences in wages between female and male employees are based on seniority and/or merit, or a different factor other than gender that constitutes a legitimate business necessity.  Employers will also be required to keep employee’s wage records for three years, rather than just two.

The amended law provides:

  • An employer shall not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates:
    • The wage differential is based upon one or more of the following factors:
      • (A) A seniority system.
      • (B) A merit system.
      • (C) A system that measures earnings by quantity or quality of production.
      • (D) A bona fide factor other than sex, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. For purposes of this subparagraph, “business necessity” means an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.
    • Each factor relief upon is applied reasonably
    • The one or more factors relied upon account for the entire wage differential.

The bill cites studies that found that female employees in California earned an average of 84 cents to every dollar a male employee earned.  This gap is even larger for women of color, especially Latina women.  Even more shocking is the fact that collectively, female full-time employees in California earned approximately $33.6 billion less every year than their male counterparts.

Employees who feel discriminated against in relation to their pay may file a civil lawsuit within the one-year statute of limitations through the California Superior Court for reinstatement, lost wages and benefits, and equitable relief.  We are looking forward to bringing the benefits of this law to our clients.  Contact us if you believe you have a Fair Pay Act claim.

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