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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, including 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.

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