California Enacts New Fair Pay Law

October 9, 2015

California governor Jerry Brown has signed Senate Bill 358, a revision of existing law aimed at closing the gender wage gap in the state. Despite California prohibiting gender-based wage discrimination since 1949, women working full-time year round earn an average at 84 cents to every dollar a man earns, even when in equivalent positions. Latina women in California make only 44 cents for every dollar a white male makes.

Under the new law, effective January 1, 2016, an employer may not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work (taking into consideration skill, effort, and responsibility) performed under similar working conditions, except where the employer demonstrates the wage differential is based upon one or more of the following 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, such as education, training, or experience.

A bona fide factor applies only if the employer can demonstrate that it is not based on or derived from a sex-based differential in compensation, it is job related with respect to the position in question, and it is consistent with a business necessity. All of the factors must be applied reasonably, and those factors relied upon must account for the entire wage differential. Also note that a difference in job titles does not indicate a difference in work. For example, a female housekeeper and a male janitor may do substantially similar work, despite having different titles, and therefore be entitled to equal rates of pay.

Under the law, employers should maintain records of the wages and wage rates, job classifications, and other terms and conditions of employment. All of the records should be kept on file for a period of three years—an increase from the previous legislation.

The law also prohibits employers from discriminating or retaliating against an employee who seeks fair wages under this law or who discloses their own wages, discusses the wages of others, or inquires about another employee’s wages.

The text of the law can be read here.