Equal Pay

Expansion of the California Equal Pay Act

Expansion of the California Equal Pay Act

In 2017 California enacted several amendments to Labor Code section 1197.5, which resulted in significant expansion of the California Equal Pay Act. While the old law prohibited wage disparity between employees of the opposite sex, under the new law, the protections have been expanded to prevent a wage disparity between employees who are of a different race or ethnicity.

In deciding to expand the protections of Equal Pay Act, the California legislature found that the gender wage gap in California remained steady, with women earning only 84 cents on the dollar compared to men. However, for minority women the disparity is even more substantial, with African American women in California making just 63 cents and Hispanic women less than 43 cents for every dollar earned by white non-Hispanic men.

Due to the history of women receiving lesser pay than men for the same jobs, under the new law, an employee’s prior salary history can no longer be used as justification for a wage disparity.

Exceptions to the California Equal Pay Act

As with prior versions of the law, there are exceptions. The prohibitions against wage disparity apply to employees who are doing substantially similar work, when considering skill, effort, and responsibility, and when performed under similar working conditions. An employer will not be in violation of the law when a wage differential is based on one or more of the following legitimate factors:

  • A seniority system.
  • A merit system.
  • A system that measures earnings by quantity or quality of production.
  • A bona fide factor other than sex, race or ethnicity, such as education, training, or experience relevant to the job position and the needs of the business.

An employer is also required to demonstrate that factors relied upon were applied reasonably and account for the entire wage differential. In other words, the employer must prove that any wage disparity is entirely unrelated to an employee’s gender, race or ethnicity.

An employee who was the victim of wage discrimination in violation of the equal pay laws is entitled to recover twice the wages he or she lost due to the employer’s discrimination, plus interest and attorney’s fees.

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Changes to California Equal Pay Act

California recently passed Senate Bill No. 358, which amends Labor Code Section 1197.5 known as the California Equal Pay Act, to make it easier for an employee to successfully pursue a wage discrimination claim.

According to the California legislature, in 2014 the gender wage gap in California was at 16 cents on the dollar. That means a woman working full-time earned an average of 84 cents to every dollar a man earned. The wage gap extended across almost all occupations and was far worse for minority women. For example, Latina women in California made only 44 cents for every dollar a white male made, which was the biggest gap for Latina women in the U.S. Women working as full-time employees in California lose approximately $33,650,294,544 each year as a result of this wage disparity. The wage gap also contributes to higher statewide poverty rate among women, particularly among minority women and single women with children.

Although California law has prohibited gender-based wage discrimination since 1949, the California Equal Pay Act is rarely used to enforce wage disparity claims due to the difficult in establishing a successful claim. The amendment to the Equal Pay Act is designed to eliminate the gender wage gap in California by making it easier for an employee to establish a successful claim of gender-based wage discrimination.

Changes to the California Equal Pay Act

Under prior law, an employer was prohibited from paying an employee at wage rates less than the rates paid to employees of the opposite sex “in the same establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.”

To ease the requirements for maintaining a successful suit under the Equal Pay Act, the new law prohibits an employer from paying any of its employees at wage rates less than those paid to employees of the opposite sex for “substantially similar work,” when viewed as a composite of skill, effort, and responsibility. There is no longer a requirement that the jobs consist of equal work performed in the same establishment.

In addition, the new law now places the burden of proving an exception to the equal pay requirements squarely on the employer. To establish an exception, an employer must affirmatively demonstrate that a wage differential is based upon one or more specified factors. These factors include a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than sex, such as education, training, or experience. An employer is also required to demonstrate that factors relied upon were applied reasonably and account for the entire wage differential. In other words, the employer must prove that any wage disparity is entirely unrelated to the employee’s gender.

Finally, the new law prohibits an employer from terminating, or in any manner discriminating or retaliating against, any employee for enforcing his or her rights to equal pay. To facilitate enforcement of the new law, an employer cannot prohibit an employee from disclosing the employee’s own wages, discussing the wages of others, inquiring about another employee’s wages, or aiding or encouraging any other employee to exercise his or her rights to equal pay.

An employee who was the victim of wage discrimination in violation of the equal pay laws is entitled to recover twice the wages he or she lost due to the employer’s discrimination, plus interest and attorney’s fees.

Resources:

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Summary of California's Equal Pay Act

An Employee’s Right to Equal Pay

California and Federal laws generally prohibit an employer from paying its employees less than the rates paid to employees of the opposite sex. This applies when the employees’ jobs require substantially similar work, when considering their skill, effort, and responsibility, and are performed under similar working conditions. (Cal. Labor Code section 1197.5.) As an example, an employer would not be permitted to pay a female secretary less than a male secretary working in the same office and performing the same job duties. To do so would violate the equal pay laws.

Exceptions to the Equal Pay Rule

While prohibiting wage discrimination, the equal pay laws, do not prevent employers from compensating employees of the opposite sex differently for legitimate reasons, including based on a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or another system based on any bona fide factor other than sex, such as education, training, or experience. In other words, an employer can still reward its employees for good work performance without violating the equal pay laws. To qualify for an exception, it is the employer’s burden to prove that a wage disparity is based on a legitimate reason entirely unrelated to the sex of the respective employees.

Prohibition against Retaliation by Employer

Under California law, an employer is prohibited from retaliating or discriminating against an employee in any way for enforcing his or her rights under the equal pay laws. An employer also cannot prevent an employee from disclosing his or her own wages, discussing the wages of other employees, inquiring about the wages of other employees, or assisting or encouraging other employees to exercise their rights under the equal pay laws.

An Employee’s Remedies for Wage Discrimination

Wage discrimination is viewed as a very serious matter in California, which is reflected in the remedies available to an aggrieved employee. An employee who was the victim of wage discrimination in violation of the equal pay laws is entitled to recover the wages he or she lost due to the discrimination, plus interest. The employee is also entitled to recover an additional equal amount from the employer as liquidated damages. For example, this means that an employee who was deprived of $15,000 in wages due to his or her employer’s violation of the equal pay laws would be entitled to recover the unpaid $15,000 with interest, plus an additional $15,000 with interest, for a total recovery in excess of $30,000. In the event a law suit is necessary to recover these damages, an employee may also be entitled to an award of attorney’s fees. An employee who was subjected to retaliation for enforcing the right to equal pay may also be entitled to reinstatement and reimbursement for lost wages and work benefits resulting from the retaliation.

Conclusion

Wage discrimination is a serious matter that should not be overlooked by California employers or employees. California employers should be cognizant of the applicable laws when setting a pay scale for its employees. Similarly, California employees should be aware of their rights to equal pay and when those rights have been violated. When in doubt, it is important to consult with an experienced employment attorney.

Additional Resources:

California Labor Code

California Division of Labor Standards Enforcement (DLSE)

California Department of Fair Employment and Housing

Wage Discrimination

 

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