Fair Pay Act Aims to Level the Playing Field

Law Mandates Equal Pay Between Genders for Equal or Substantially Similar Work

SB 358, the “Fair Pay Act,” has been enacted by the California Legislature and signed into law by the Governor. The Act aims to eliminate the gender wage gap between women earning lower rates and their male counterparts for the same or even similar work. Nationally, women’s wages are an average of 78 cents for every dollar paid to men in comparable employment. California’s working women average 85 cents for every dollar earned by male co-workers.

The law amends Labor Code 1197.5, directing:

• Pay discrimination is prohibited for “substantially similar work,” a     broader standard than the “equal work” criterion it replaced.

• The opposite gender workers whose wages are compared can work anywhere in the same company, and need not even be “in the same establishment.” Thus, male and female workers employed by a business at different facilities in different cities must be paid comparably for substantially similar work.

• Permitted exceptions in the new law are more specific than the single catch-all phrase “any bona fide factor other than sex” found in the pre-amendment version of Labor Code 1197.5. Wage disparities between genders will now be justifiable based on at least one of several factors, applied reasonably:

o Seniority

o Merit

o Quantity and quality of production

o “A bona fide factor other than sex, such as education, training or experience.”

The Fair Pay Act also prohibits retaliation or discrimination against an employee who asserts rights under the statute or who discloses his or her own wages, discusses or inquires about wages of others, or encourages others to do so. This provision is intended to remedy the often “hidden” nature of such discrimination. Any employee who is the target of such discrimination or retaliation may bring a civil action against the employer for lost wages and work benefits and for “equitable” relief, such as an injunction.

The Act requires employers to keep pertinent employment records for three years, instead of the previous two.

The law goes into effect on January 1, 2016. Businesses should determine whether they are compliant with the law before that date by a pay structure review. In the event of disparities identified that fit the above criteria for an exception, management should accurately document the legitimate justification(s) for those differences.

If you have any questions about the new law, including confirmation of compliance with its requirements, Tim Bowles, Cindy Bamforth, and Helena Kobrin can address them.

Helena Kobrin, November 18, 2015