The California Fair Pay Act (SB 358)

On October 6, 2015, Governor Brown signed into law SB 358, the California Fair Pay Act. This act is an amendment to California Labor Code Section 1197.5. The new law is considered to be one of the strictest in the nation.  The previous law under the Labor Code prohibited employers from paying employees at a wage less than the rates paid to employees of the opposite sex in the “same establishment” for equal work on jobs which required the same degree of skill, effort, and responsibility and which were performed under the same conditions.

SB 358 Amends The California Equal Pay Act (EPA) In The Following Ways:

  • Clarifying the employee’s and employer’s burdens of proof under the EPA; (Cal. Lab. Code 1197.5).
  • Ensuring that employees performing substantially equivalent work are paid fairly by requiring equal pay for work “of comparable character” and eliminating the “same establishment” requirement; (Cal. Lab. Code 1197.5(a)).
  • Modifying the poorly defined catch-all affirmative defense of “factors other than sex” to include “bona fide factors other than sex”; (Cal. Lab. Code 1197.5(a)(1) emphasis added).
  • Ensuring that any legitimate, non-sex related factor(s) relied upon are applied reasonably and account for the entire pay differential; (Cal. Lab. Code 1197.5(a)(2)-(3)).
  • Prohibiting retaliation or discrimination against employees who disclose, discuss, or inquire about their own or co-workers’ wages for the purpose of enforcing their rights under the EPA. (Cal. Lab. Code 1197.5(j)(1)-(2)).

What This Means For Employers:

This amendment makes it easier for employees to prevail in litigation because it lowers the standard from equal pay for equal work to equal pay for comparable work. Therefore the new law could lead to employers being burdened with an increase in litigation. Employers sued by workers would have to show that the wage difference are due to factors other than sex, such as merit or seniority, that they are job related, reasonable, and that they are not due to discrimination.

However, due to already existing prohibitions against gender discrimination, found in both federal and state anti-discrimination laws, this law may have minimal practical effect or be duplicative of already existing prohibitions and mandates. Therefore, employers who are already in compliance with existing laws are likely compliant with this new legislation. Regardless, it may be prudent for employers to take this opportunity to conduct an audit of employee pay scales to ensure compliance with the new standards.

Additionally the amendment contains a record keeping requirement for employee wages and wage rates, job classifications, and other terms and conditions of employment to a period of three years. (Cal. Lab. Code § 1197.5(d)). Employer record keeping practices should be reviewed to ensure compliance with this minimum standard.