On October 6, 2015, Governor Jerry Brown signed the California Fair Pay Act (Senate Bill 358, the “Fair Pay Act”). The Fair Pay Act which will become effective on January 1, 2016, expands existing laws by prohibiting California employers from paying different rates to male and female workers who perform “substantially similar” work. Previously, California law only prohibited an employer from paying different amounts to male and female workers who performed the same work with the same job title at the same location.
The Fair Pay Act still allows employers to pay men and women differently, if they can show the difference is because of a seniority or 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.” The “bona fide” exception is limited by the following language: “This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity.”
The Fair Pay Act’s authors included the quoted limitation to substantially narrow the situations where an employer is permitted to pay male and female workers different amounts. The previous law did not contain any such limitations, and employees found it almost impossible to rebut an employer’s contention that it had a non-gender reason for paying different rates to its male and female employees.
Employees who prove they were paid less than their opposite sex counterparts are entitled to recover the difference between the two salaries, liquidated damages, costs of suit and reasonable attorney’s fees.
The Fair Pay Act has several other important provisions. Previously, an employer was only required to pay employees of the opposite sex the same amount if they worked in the same location and their jobs required equal skill, effort, and responsibility. The Act eliminates this standard, and now allows employees to compare salaries of co-workers in other company locations. This will allow employees who work in a location with workers primarily of one gender to compare their salaries with workers in a facility which is primarily staffed by workers of the opposite gender.
The Act also creates a legal cause of action for employees who are fired or suffer retaliation after disclosing their salary or inquiring about another employee’s wages. While previous law permitted workers to discuss their salaries, it did not provide a remedy to the employee if he or she were subsequently disciplined or terminated for doing so. Thus, employees were effectively discouraged from asking whether they were paid less than their opposite sex co-workers because they feared losing their jobs. Now, an employee who is terminated for disclosing his or her salary has the right to sue for job reinstatement, reimbursement of lost wages and benefits, interest, and equitable relief.
The Fair Pay Act was approved unanimously by California’s Senate, and with only two “no” votes in the Assembly. According to the Fair Pay Act’s author, the Act is the toughest equal-pay measure in the nation . Whether the Fair Pay Act is effective in curtailing gender pay discrimination depends on many factors, not the least of which is what standard of evidence the courts will require from employees who claim they perform “substantially similar” jobs to higher paid colleagues. The Fair Pay Act does not define the term “substantially similar,” which may ultimately create new loopholes as substantial as the ones this legislation was intended to close.
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