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California Fair Pay Act Takes Effect at the Beginning of 2016

money-money-1418206A new wage equality law took effect in California on January 1, 2016. Governor Jerry Brown signed SB 358, the California Fair Pay Act, on October 6, 2015. Wage discrimination based on sex has been prohibited by state and federal law for decades, but from the employees’ side, the laws have proven difficult to enforce. Courts have interpreted the statutes as allowing broad exceptions for factors other than sex that employers may consider in setting wages. SB 358 amends the California Labor Code to limit these exceptions.

California’s pre-SB 358 equal pay statute prohibited employers from paying workers of one sex less than workers of the opposite sex for “equal work…requir[ing] equal skill, effort, and responsibility…under similar working conditions.” Cal. Lab. Code § 1197.5(a). It allowed exceptions for situations in which earnings are determined based on seniority, merit, “quantity or quality of production,” or any other “differential based on any bona fide factor other than sex.” Id. The federal Equal Pay Act is almost identical, allowing exceptions for “a differential based on any other factor other than sex.” 29 U.S.C. § 206(d)(1).

Courts have broadly interpreted the exception for “bona fide factors” not related to sex. This led to narrow interpretations of what constitutes “equal work” under the state and federal statutes. It was not enough for a plaintiff to prove that they received less pay than a co-worker of the opposite sex for similar or equivalent work. In order to prevail on a wage discrimination claim under California’s pre-SB 358 law, a plaintiff had to prove that “the jobs to be compared have a ‘common core’ of tasks, i.e. [that] a significant portion of the two jobs is identical.” Stanley v. Univ. of S. Cal., 178 F.3d 1069, 1074 (9th Cir. 1999); see also Green v. Par Pools, Inc., 3 Cal.Rptr.3d 844, 852 (Cal. App. 4th 2003).

SB 358 was introduced in the California Senate in February 2015, and it passed by a vote of 38-0 in May. The Assembly passed it, 76-2, in late August, and it went to the Governor’s office in September. The bill includes findings regarding California’s wage gap, stating that a woman earned 84 cents for every dollar a man earned for full-time work in 2014, with an even larger gap for women of color.

Prior to January 1, § 1197.5(a) of the California Labor Code did not define the term “bona fide factor other than sex.” As amended by SB 358, this section now goes into some detail regarding what may constitute a “bona fide factor other than sex.” Any factor claimed by an employer as an exception to the equal pay law:  (1) may not be “based on or derived from a sex-based differential in compensation,” (2) must be directly related to the complaining employee’s particular job, and (3) must be “consistent with…an overriding legitimate business purpose.” Cal. Lab. Code § 1197.5(a)(1)(D), as amended by SB 358. An employee can negate the employer’s claim by showing that an “alternative business practice” would achieve the same goal without the difference in wages. Id.

If you or your business is involved in a lawsuit or other legal dispute, you should seek the assistance of a knowledgeable and experienced employment law attorney, who can protect your interests and help you fight for your rights. James G. Schwartz has advocated on behalf of Bay Area businesses and business owners since 1976. To schedule a free and confidential consultation, contact us today online or at (925) 463-1073.

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California Legislature Passes New Employment Statutes, Pleasanton Business & Commercial Law Blog, October 14, 2015

Social Media Reference Searches by Employers Do Not Violate the FCRA, According to California Federal Court, Pleasanton Business & Commercial Law Blog, June 30, 2015

Lawsuit Against California Business by Former Employee Alleges Violations of Privacy Rights, Pleasanton Business & Commercial Law Blog, June 15, 2015

Photo credit: By Sonicyouth86 (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons.