California Equal Pay Act expansion takes effect January 1

by Cathleen S. Yonahara
Freeland Cooper & Foreman LLP

California’s equal pay law will provide protections for race and ethnicity as well as gender as of January 1, 2017.

Since 1949, California law has prohibited gender-based wage discrimination, and in 2015, that protection was expanded to require equal pay for men and women who perform “substantially similar” work for an employer regardless of their location and to place the burden of proof on the employer to demonstrate that any pay gap is due to nondiscriminatory factors.

Effective January 1, the law also will protect employees from disparities in pay based on ethnicity. The new prohibitions on wage differentials based on ethnicity track the prohibitions on wage differentials based on gender. The employer bears the burden of proving that a wage differential is based on:

  1. A seniority system;
  2. A merit system;
  3. A system that measures earnings by quantity or quality of production; or
  4. A “bona fide factor” other than race or ethnicity such as education, training, or experience.

The employer must demonstrate that the “bona fide factor” isn’t derived from a race- or ethnicity-based differential in compensation, is job-related for the position in question, and is consistent with business necessity.

An employee can defeat that defense by showing that an alternate business practice would serve the same business purposes without producing the wage differential. In addition, the employer must demonstrate that each factor it relied on was applied reasonably and that one or more of those factors accounted for the entire wage differential. Also effective January 1, past salary won’t, by itself, justify a disparity in compensation.

Employers are advised to conduct an internal audit to ensure that any pay disparities between employees of different genders, races, or ethnicities performing substantially similar work can be explained using legitimate factors. Also, employers should refrain from asking job applicants about their salary history, and managers should be trained on how to comply with the requirements of the California Equal Pay Act.

For more information on changes to the California Equal Pay Act, see the October 24 issue of California Employment Law Letter.

Cathleen S. Yonahara is a partner with Freeland Cooper & Foreman LLP in San Francisco and an editor of California Employment Law Letter. She can be reached at yonahara@freelandlaw.com.

On January 10, 2017, Yonahara and Mark Schickman, also a partner with Freeland Cooper & Foreman LLP and an editor of California Employment Law Letter,will present 2017 California Employee Handbook Updates: Policy Revisions to Make on Pay, Smoking, Background Checks, Paid Leave, and More. The 90-minute webinar will include a discussion of the Equal Pay Act’s new requirements.

About California Employment Law Letter:
Excerpted from California Employment Law Letter, and written by attorneys at the law firm of Freeland Cooper & Foreman LLP.The contents of CALIFORNIA EMPLOYMENT LAW LETTER are intended for general information and should not be construed as legal advice or opinion. Readers in need of legal advice should retain the services of competent counsel. The State Bar of California does not designate attorneys as board certified in labor law. Contact the attorneys at Freeland Cooper & Foreman LLP
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