California Fair Pay Act: Equal Pay Is On The Way

California Fair Pay Act: Equal Pay Is On The Way

Have you ever felt that you were not paid fair wages due to race, ethnicity, or salary history? On January 1, 2017, the state legislature added two provisions to the California Fair Pay Act to address these concerns regarding equal pay

California Fair Pay Act: Revised

Previously, the Fair Pay Act stated that workers conducting “substantially similar work” must be paid equally.  What does it mean for work to be “substantially similar”?  Substantially similar work is work that is mostly similar in skill, effort, and responsibility. To be compared, employees do not have to work out of the “same establishment,” but they must share the same employer.

In order to justify a wage difference between employees, employers must be able to show that a “bona fide factor other than sex” causes the difference.  Some potential factors include a seniority system, differences in quality of work, differences in quantity of work, or merit-based metrics. And importantly, workers cannot be retaliated against for discussing their salaries with their coworkers or asking about their coworkers’ wages.

Two new amendments strengthen the Fair Pay Act–already the country’s strongest pay equity legislation.  For more details on the Fair Pay Act, see our previous blog post.

Bans Pay Differentials Based on Race or Ethnicity (SB 1063)

This amendment prohibits pay differences that are based on race or ethnicity.  If a compensation gap exists for workers doing similar work, an employer must be able to present a “bona fide factor” other than race or ethnicity to justify the difference. Bona fide factors can include seniority or merit systems or systems that measure quantity or quality of work.  They can also include education, training, or experience, as long as these factors are not based on or derived from a race- or ethnicity-based differential in compensation, are job-related with respect to the position in question, and are consistent with a business necessity. But if an employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential, business necessity will not be a sufficient defense.

 Limits Use of Salary History (AB 1676)

This amendment prohibits employers from using salary history to justify compensation disparities. While some employers may request salary history from job applicants–except in San Francisco and other jurisdictions to have banned the practice–that information no longer constitutes a “bona fide factor” that can permissibly justify a wage differential. AB 1676 will especially help caregivers who have taken time off to care for children or aging parents. Previously, nothing prevented an employer from basing current salary on salary history from years ago when the caregiver exited the market. Now, that practice is unlawful.    

Central Takeaways

  • Salary disparities can no longer be justified by race, ethnicity, or salary history
  • If you are completing “substantially similar” work as a co-worker, you are entitled to equal pay
  • You are allowed to discuss your compensation with others at your workplace and approach your employer about your salary without fear of retaliation or punishment

Many thanks to our amazing JFCS summer intern Max Swan for his assistance in drafting this blog post.

Image source: Michelle G under Creative Commons