California Fair Pay Act Mandates Equal Pay Based on Sex, Race or Ethnicity
In their bid to attract qualified job candidates in today’s high demand- short supply labor market, employers must strictly comply with the California Fair Pay Act.
The Act prohibits paying lesser wage rates to employees of the opposite sex or of another race or ethnicity for “substantially similar work” performed under similar “working conditions.”
“Substantially similar work” is mostly similar in skill, effort, and responsibility and performed under similar working conditions. “Skill” refers to required experience, ability, education, and training. “Effort” refers to the necessary amount of physical or mental exertion. “Responsibility” refers to the degree of accountability or duties required in performing the job. “Working conditions” means the physical surroundings (temperature, fumes, ventilation) and hazards.
To justify paying lesser wage rates to any affected similarly-positioned worker, the employer must prove the pay differential is solely attributable to:
- Seniority;
- Merit;
- A production-based system; and/or
- A “bona fide factor other than sex, race, or ethnicity” (i.e., an objective factor that is job related and consistent with a legitimate business necessity, such as education, training or experience).
The Act also ● requires employers to keep pertinent employment records for three years; ● allows employees to inquire about another’s compensation (although employers are not required to divulge that information); and ● permits employees to openly discuss compensation terms with each other, and/or aid or encourage their co-workers to exercise their rights without fear of reprisal.
Best Practices:
- Evaluate and assess whether workers who perform substantially similar jobs are paid the same;
- Update job descriptions;
- Educate and train managers on how to apply this law;
- Base all compensation decisions, including salary, bonuses and commissions, solely on objective criteria that comport with the Act; and
- For any pay disparities that fit the Act’s exceptions, accurately document the legitimate justification(s) for these differences with the help of a competent employment attorney.
For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
See also:
- Workplace Discrimination Prevention – California’s Fair Employment and Housing Act, A History (March 26, 2021)
- For the Record – Sound Management Practices for Personnel Documentation(August 14, 2020)
- Why Job Descriptions Matter (April 4, 2018)
- What’s New for 2018 – Salary History – Salary History is No Longer a Factor for Hiring in California. (October 20, 2017)
Cindy Bamforth
August 20, 2021