APPROVED PAY EQUITY TASK FORCE RESOURCES
The following resources are approved as of September 10, 2018. Check back for updates.

DISCLAIMER: The materials provided on this web site are for informational purposes only and not for the
purpose of providing legal advice. You should contact an attorney to obtain legal advice about
any particular issue or problem. The materials do not represent the opinions or conclusions of individual members of the Task Force. The posting of these materials does not create requirements or mandates.

EMPLOYEES

EMPLOYERS

UNIONS

Overview of Current California Laws and FAQs

California’s Equal Pay Laws

For decades, the California Equal Pay Act (CA Labor Code Section 1197.5) has prohibited an employer from paying its employees less than employees of the opposite sex for equal work.

In October 2015, Governor Brown signed the Fair Pay Act (SB 358 – Jackson), which changed the law and strengthened our state equal pay law in a number of ways, including:

  • Prohibiting unequal rates of pay for employees of the opposite sex who perform “substantially similar work,” instead of “equal work;”
  • Eliminating the requirement that employees’ wage rates only be compared to those of other employees working in the same physical location or office (the “same establishment”);
  • Making it more difficult for employers to justify paying an employee of one sex less than another when they do substantially similar work by narrowing the defenses available;
  • Requiring that whatever factors an employer relies on to justify a difference in pay (like different levels of education, training, or experience) be job-related, used reasonably, and account for the entire pay difference;
  • Specifically making it illegal to retaliate or discriminate against employees who discuss or ask about pay, or take some step to enforce their own or a co-worker’s equal pay rights; and
  • Extending the number of years that employers must maintain records related to pay from two to three years.

 

In September 2016, Governor Brown signed the Wage Equality Act of 2016 with further amendments (SB 1063 – Hall and AB 1676 – Campos) to the Equal Pay Act including:

  • Adding race and ethnicity to the Equal Pay Act and thereby prohibiting employers from paying employees of one race or ethnicity less than employees of another race or ethnicity for substantially similar work.
  • Amending the Equal Pay Act to bar employers from relying on an employee’s prior salary (by itself) to justify unequal pay between employees doing substantially similar work.

 

In October 2017, Governor Brown signed two further amendments to the law (AB 168 – Eggman and AB 46 – Cooper) which take effect on January 1, 2018:

 

  • Prohibits all employers — including the Legislature, the State, and local government agencies — from seeking salary history information about an applicant for employment and requires employers to provide the pay scale for a position to an applicant upon reasonable request.
  • Declares that the Equal Pay Act also applies to public sector employers, including the State itself, by defining “employer” to include both public and private employers.

 

Frequently Asked Questions

  1. What state and federal agencies enforce equal pay laws?

In California, the Labor Commissioner’s Office (also known as the Division of Labor Standards Enforcement or DLSE) has the authority to enforce Labor Code Section 1197.5, which prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of the opposite sex, or of a different race or ethnicity for substantially similar work.

See https://www.dir.ca.gov/dlse/California_Equal_Pay_Act.htm.

The Department of Fair Employment and Housing (DFEH) enforces the Fair Employment and Housing Act (FEHA), which among other things, precludes the discrimination in employment on the basis of gender, ethnicity, and race.  Paying different wages due to an employee’s gender, race, or ethnicity is considered discrimination.

At the federal level, the Equal Employment Opportunity Commission (EEOC) enforces the federal Equal Pay Act and Title VII of the Civil Rights Act of 1964, Age Discrimination in Employment Act of 1967, and Title I of the American Disabilities Act of 1990, which preclude discrimination in employment, such as unequal compensation, based upon protected classifications.

 

  1. Does California law require employers to pay all employees who perform the same or substantially similar job the same wage rate?

California law requires equal wages for employees of the opposite sex, or of a different race or ethnicity, who perform the same or substantially similar work.  An employer can still adjust wages based on a seniority or merit system, a system that measures earnings by quality or quality of production, or another bona-fide factor that is job related and necessary for the business such as education, training, experience, or the geographical location of the employee and cost of living in that area. Employers may consider conducting a pay equity analysis to determine whether wages should be adjusted within their organization to comply with the law.

  1. Does an employer have to conduct a pay equity analysis of all employees’ wages?

There is no mandate to conduct an audit.  However, it may be a good practice for employers wishing to proactively comply with the law. Employers may want to consider conducting any audit with the advice of an attorney or HR professional.

 

  1. What is the liability an employer can face if there is a wage differential that cannot be explained or justified by one of the recognized or bona fide factors?

An employer could face an enforcement action by one of the above listed state or federal agencies or a civil lawsuit, and may potentially have to pay back wages, liquidated damages, lost work benefits, attorney’s fees, etc.  If there is discrimination or retaliation involved, emotional distress and punitive damages may also be assessed.

 

  1. Can an employee discuss his or her wages with other employees?

Employees can discuss wages with one another, including asking an employee about his or her wages, without discrimination or retaliation by the employer.  There is no obligation on any employee to disclose his or her wage or engage in these discussions.  Employers can take reasonable measures to protect the privacy of information regarding employees’ compensation, including prohibiting employees who have access or control over confidential wage information given their job duties and responsibilities, from disclosing such information without the consent of those employees.  However, employers should be cautious about employees’ rights under the Labor Code to report violations and to assist other employees in exercising their rights to pursue equal pay.

 

  1. Can an employer ask an applicant about his or her prior salary?

No.  California law prohibits all employers from seeking salary history information about an applicant for employment and requires employers to provide the pay scale for a position to an applicant upon reasonable request.  [For additional information—LINK TO GUIDANCE FOR ER ON SETTING STARTING SALARY]

Statutory History of Equal Paw Laws in California and the U.S.

Statutory History of Equal Pay laws in

California and the United States

 

California first passed an Equal Pay Act in 1949.  Before the Fair Pay Act of 2015 was enacted, Labor Code section 1197.5 provided that:

 

No employer shall pay any individual in the employer’s employ 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 . . . .

 

Exceptions to this prohibition were made for wages paid pursuant to systems of seniority, merit, or that measure earnings by quantity or quality of production; or differentials based on any bona fide factor other than sex.  Enforcement was by the California Labor Commissioner.

 

Effective January 1, 2016, the “Fair Pay Act of 2015” expanded California’s Equal Pay Act by removing the requirement that the pay differential be within the same “establishment,” and replaced the “equal” and “same” job, skill, effort, and responsibility standard, with a new standard that only requires a showing of “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.” These changes make it easier for an employee to bring an equal pay suit, permitting a plaintiff to compare him or herself with employees of the opposite sex working at any location for the same employer, and in any similar job.

As amended, California’s Equal Pay Act further requires employers to affirmatively demonstrate that any wage differential is based entirely and reasonably upon one or more factors.  Added to the three existing factors (seniority, merit, or production-based) is a “bona fide factor”: that is, a factor not based on or derived from a sex-based differential in compensation, which is related to the position in question and is consistent with a “business necessity” (defined as “an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve”). The “bona fide factor” defense is inapplicable if the plaintiff demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential. With the enactment of SB 358, California Labor Code section 1197.5 (a) now provides:

 

(a)  An employer shall not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates:

(1) The wage differential is based upon one or more of the following factors:

(A) A seniority system.

(B) A merit system.

(C) A system that measures earnings by quantity or quality of production.

(D) A bona fide factor other than sex, such as education, training, or experience. 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. For purposes of this subparagraph, “business necessity” means an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.

(2) Each factor relied upon is applied reasonably.

(3) The one or more factors relied upon account for the entire wage differential.

 

California’s Equal Pay Act was amended again in 2016 by Wage Equality Act of 2016 (SB 1063).  Effective January 1, 2017, California’s equal pay law also prohibits unequal pay for employees of different races or ethnicities.  Labor Code section 1197.5(b), now provides in pertinent part:

 

An employer shall not pay any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions . . .

 

California’s Equal Pay Act was again amended in 2017 (AB 168 – Eggman and AB 46 – Cooper) to specify that this act applies to public and private employers.  Also, AB 168 added Section 432.3 to the Labor Code, which provides, in pertinent part:

 

(a) An employer shall not rely on the salary history information of an applicant for employment as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant.

(b) An employer shall not, orally or in writing, personally or through an agent, seek salary history information, including compensation and benefits, about an applicant for employment.

(c) An employer, upon reasonable request, shall provide the pay scale for a position to an applicant applying for employment.

 

Both bills became effective January 1, 2018.

 

The federal Equal Pay Act was passed in 1963 (Pub.L.  88-38; 77 Stat. 56). This act amended the Fair Labor Standards Act of 1938, as amended (29 U.S.C. et seq.), by adding a new subsection (d).

 

(d) (1) No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee.

 

The Department of Labor had responsibility for enforcement of the federal Equal Pay Act until the federal Reorganization Plan No. 1 of 1978, which, as of July 1, 1979, shifted responsibility for enforcing both the Equal Pay Act and the Age Discrimination in Employment Act from the Labor Department to the Equal Employment Opportunity Commission. https://www.eeoc.gov/eeoc/history/35th/thelaw/epa.html

 

 

Statutory History of Employment Discrimination Laws in California and the United States

 

California’s and the federal equal pay laws have always been distinct from laws generally prohibiting employment discrimination.  California’s Fair Employment Practice Act enacted in 1949 prohibited employment discrimination because of race, religious creed, color, national origin, or ancestry, and did not prohibit sex discrimination. Sex was added as a prohibited basis of discrimination in 1970 (Cal.Stats. 1970, ch. 1508).  Enforcement was through the Fair Employment Practice Commission, later named the Fair Employment and Housing Commission.  The Commission was abolished in 2012.  Since that time enforcement responsibility rests solely with the Department Fair Employment and Housing.

 

Title VII of the federal Civil Rights Act of 1964 (Pub. L. 88-352) prohibited race, color, religion, sex, or national origin discrimination in employment (42 USC Sec. 2000e).  The administrative agency responsible for enforcement of Title VII is the Equal Employment Opportunity Commission.

In 1965, President Johnson issued Executive Order 11246.  This Executive Order, as amended by subsequent orders, currently prohibits federal contractors and federally–assisted construction contractors and subcontractors, who do over $10,000 in Government business in one year from discriminating in employment decisions, including compensation, on the basis of race, color, religion, sex, sexual orientation, gender identity or national origin.  Further information about this Executive Order is available at OFCCP [insert link].

Race and Ethnicity

The California Commission on the Status of Women and Girls (CCSWG) formed this Task Force in 2016, the year that the Fair Pay Act of 2015 took effect. The Fair Pay Act amended California’s equal pay law as it applies to employees of the “opposite sex.” In 2017, another law took effect that further expanded protections under California’s equal pay law to employees of a “different race or ethnicity.” Because the CCSWG formed this Task Force in 2016, our work has focused primarily on creating tools and guidance related to implementation of the Fair Pay Act. We recognize that equal pay issues affect employees at the intersection of sex and race/ethnicity and that more work needs to be done to address the wage gap facing people of color and women of color in particular. Our hope is that the tools and materials provided here will serve as useful starting points for employees, employers, and unions so that we can work towards achieving pay equity for all workers throughout California.

Information About Wages

There are many resources that employers and employees may wish to consult to determine appropriate compensation for a particular role. Please also note that job titles are not determinative but just an initial step in determining appropriate compensation for a particular role. The Task Force recommends consulting resources that provide a pay range, rather than the median compensation for a particular role. It is also recommended that more than one resource be consulted.

Possible resources include, but are not limited to:

 

  • Department of Labor Bureau of Labor Statistics: Occupational Outlook Handbook. Provides information about the characteristics of various jobs, the skills, education and training required for them, typical salaries and future outlook for the occupation. It is organized by job family. See http://www.bls.gov/ooh/.

 

  • The Department of Labor Bureau of Labor Statistics: O*Net Online.Deep database that provides job related info by a number of different search techniques, such as industry, occupation growth rates, level of training and preparation needed (job zones) and other characteristics. See https://www.onetonline.org/ .

 

  • Glass Door. Glass Door is a database of information about employers that includes salary reports submitted by both employer and employee users of the site. See https://www.glassdoor.com/index.htm.

 

  • Salary. Salary.com is a database that allows employers to analyze their internal pay practices against market rates. See http://www.salary.com/.

 

  • Payscale. Database that compiles individual salary profiles through crowdsourcing and big data technologies for use by employers and employees. See http://www.payscale.com/.

 

  • SimplyHired. Calculator allows users to compare salaries with others in the same profession regionally and nationally.  Data is taken from their job listings. See http://www.simplyhired.com/

 

 

The resources provided above are not an exhaustive list and the Task Force does not endorse reliance on any particular resource.  Please also note that the data provided in the resources above may change following future development in California law.