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.
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.