Employer Resources

Why Should Employers Care That Employees Are Paid Equitably?

 

Beyond legal compliance, it’s the right thing to do. There are also some practical reasons to commit to pay equity. You can brag about it. A company’s good reputation makes it easier to attract consumers, and recruit and retain employees in today’s competitive and informed workforce. And, if you are open and transparent about pay practices, you are ready and primed to quickly and accurately respond if employees complain or publicly accuse the company of paying them unfairly.

 

Guidance For Employers on Starting Compensation

 

Overview of Current Law

Under California law pursuant to Labor Code 432.3(e), employers cannot:

  • Seek salary history, including “compensation and benefits,” of an applicant
  • Rely on salary history information in determining whether to offer employment or what salary to offer unless the applicant voluntarily and without prompting discloses their salary history
  • Rely on prior salary, by itself, to justify any disparity in compensation based on sex, race, or ethnicity

 

What Can I do to Promote a Culture of Pay Equity

 

Pay disparities in the workplace amongst men and women, or different races or ethnicities, can be the result of direct and indirect bias. Examples of indirect bias include assuming women perform certain jobs or duties instead of men; presuming women are not interested in advancement or promotions; making subjective pay determinations that are not based upon job-related factors; or basing an individual’s compensation solely on prior wage or salary history. The Task Force recommends that employers consider adopting some or all of the below Action Items to promote a culture of pay equity within the employer’s organization. These Action Items are not required by law and may not be feasible for all employers. However, adopting some, or all, of these action items may assist in promoting a culture of pay equity in the workplace.

 

Step-by-Step Job Evaluation Template For Employers to Determine Wage Rate

 

Generally, California law requires employers to pay the same wage rate to employees who perform substantially similar work. Below is a list of steps an employer can complete to analyze compliance with the California law. The examples provided are meant to help readers understand the California Fair Pay Act. While reading the examples, keep in mind that if employers assign different tasks to male and female employees, they must have reasons for doing so that are not related to the employees’ gender, or they may be violating other workplace laws, such as the California Fair Employment and Housing Act or Title VII of the Civil Rights Act of 1964.

 

I want to perform a gender pay equity analysis

 

California law requires that employers pay women and men doing substantially similar work the same wage rate. To comply, businesses may want to evaluate the jobs their employees do and compare wages by gender:

  • Collect the right data
  • Identify employees doing substantially similar work
  • Compare wage rates for employees of the opposite sex
  • Determine reasons for any differences in pay
  • Remedy any disparity that cannot be justified 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.

 

Tips For Compliance With The California Fair Pay Act

 

Although not required, an employer can take several proactive steps to comply with California’s equal pay laws. In doing so, employers may seek counsel for guidance and assistance with compliance.

 

Measuring the Pay Gap

 

The information provided here is meant to give a general framework of questions and concepts for employers interested in conducting a pay audit, hiring a qualified statistician to conduct a pay audit for them, or hiring internal staff to do this work. The purpose of this tool is three-fold:

 

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.

 

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.