California Leads the Nation Again on Equal Pay Law | DCR Workforce Blog

California Leads the Nation Again on Equal Pay Law

We may actually see the gender pay gap eliminated – at least in California! The State has just ensured the strongest of equal pay protections yet seen in the country by signing the California Fair Pay Act into law. Actress Patricia Arquette, who put the spotlight on pay equality during her acceptance speech at the 2015 Academy Awards, praised the law as “a critical step toward ensuring that women in California are seen and valued as equals.”

Introduced by State Senator Hannah-Beth Jackson earlier this year, the law makes it hard for employers to establish pay gaps between workers based on factors other than skill level or seniority. The legislation also protects workers from retribution for sharing salary information or asking about their colleagues’ compensation details. It is hoped that the bill is another step towards closing the persistent wage gap between men and women which has not seen much change since the passage of the California Equal Pay Act sixty six years ago!

The California bill also holds the distinction of meriting strong support from Democrats and Republicans as well as business groups like the California Chamber of Commerce. The bill closes the loophole in the earlier Equal Pay Act. The standard for equal pay is not ‘equal work’ anymore. If the workers are engaged in “substantially similar work” then they are entitled to the protections of the law and assured of equal pay.

A recent Gallup poll indicates that, despite corporate commitments and media attention to the issue, nothing much has changed in the two years since Gallup recorded the status of women in the workplace in 2013:

  • Gender gap in pay equity continues unchanged. 80% of women are found to be unsatisfied with their pay compared to 56% of men.
  • 17% of women believe they were denied a raise at work because of their gender, which contrasts heavily with the 4% of men who felt similarly oppressed.
  • 19% of women report having felt discriminated against because of their gender while a low 4% of men felt similarly ill-treated.
  • Women are twice as likely as men, at 12%, to feel overlooked for promotion whereas just 5% of men feel so.

An analysis of U.S. Census data by the National Partnership for Women & Families, a Washington, D.C.-based, nonprofit advocacy group for workplace fairness, found that Latinas in California make only 44 cents for every dollar a white man makes, while African-American women are paid only 64 cents per dollar earned by white men. It is estimated that women leave $33 billion on the table when they do not claim equal pay as their right.

California’s existing equal pay law limits the comparison of wage rates to workers in the same establishment, and requires proof that the jobs being compared involve equal work and require equal skill, effort, and responsibility. Slated to come into effect on Jan 1st, 2016, the new California Fair Pay Act does not expect a woman to be working at the same job as a man when claiming equal pay. It also specifies that:

  • An employer cannot pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, not just for equal work or the exact same job title.
  • An employer, sued by a worker, has to show that a difference in wages is due to factors other than gender, such as merit or seniority.
  • Employees can file complaints alleging pay gaps between people doing substantially similar jobs at different worksites, not just at their own site. Workers at one location could challenge higher wages paid to those at another location owned by the same employer.
  • The new Act bars retaliation against employees who ask about or discuss wages paid to co-workers, and clarifies their ability to challenge discrimination. The bill creates a new cause of legal action for retaliation against workers seeking fair pay.
  • Any claims of business necessity must be substantiated by an overriding legitimate business purpose which is effectively fulfilled. However, this exemption fails to apply in instances where an employee can prove that an alternative approach is available which meets the business objective without creating a wage differential.
  • Any exceptions must be clearly specified, promoting transparency and effective enforcement when the wage differential is based on:
  • A seniority system;
  • A merit system;
  • A system that measures earnings by quality or quantity of production; or
  • Some other bona fide factor other than gender such as education, training, or experience.

With this law, unequal pay claims can be pursued through the Labor Commissioner or litigation. If successful, the employee can recover the pay differential plus an additional equal amount in liquidated damages from the employer as well as litigation costs and attorneys’ fees. Even a signed agreement from the employee professing willingness to work at a lower rate of pay will not bar such a claim or lawsuit.

California is preparing to go a step further. Another proposed bill aims to prohibit an employer from seeking salary history information, including compensation and benefits, with regard to a job applicant. The bill prohibits inquiries in-person, or through recruiters or placement agencies; so that the employer does not perpetuate gender-based pay differentials. We will keep you posted on the progress of this legislation, and will periodically report on the impact this new Act will have on the gender compensation gap.

If you know of similar movements in other states, please let us know.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.