December 19, 2018
California’s Fair Pay Act (CFPA), which recently addressed the stark problem of wage discrimination in this state, had the effect of modifying existing laws under California Labor Code section 1197.5 in nine important ways.
First, it established a “substantially similar” standard. Labor Code section 1197.5(a) now prohibits employers from paying an employee wages less than those paid to members of the opposite sex who perform “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions,” rather than the previous standard of equal pay for “equal work” in the “same establishment.” This “substantially similar” standard has the effect of broadening the scope of the types of jobs that can qualify for equal wages.
Second, Labor Code section 1197.5(b) additionally prohibits employers from basing wage differentials on race or ethnicity, under the same “substantially similar” standard.
Third, it shifts the burden to employers to prove that if there is a wage differential, the factor(s) relied upon (seniority, merit, education, training, experience, or other bonafide factors) were reasonably applied and account for the entire wage differential. Most importantly, the employer must prove that the bonafide factor relied upon is consistent with a legitimate business necessity, and no other alternative business practice would serve such a purpose without producing a disparity in wages. [Lab. Code §§ 1197.5(a)(1)(D), (b)(1)(D).] This has the effect of eliminating the need for employees to show proof of the employer’s discriminatory intent – a deviation from many other discrimination statutes.
Fourth, it eliminates the language of “same establishment” for equal work. This means that employees of the same employer, but at different physical locations (even outside California), can compare wages. Employers can show, however, that the difference in wages is attributed to a legitimate business necessity of compensating for the decrease/increase in cost of living, or other market or geographic factors.
Fifth, it eliminates the common practice of an employer justifying wage differentials by solely relying on an employee’s prior salary. [Lab. Code §§ 1197.5(a)(3), (b)(3).] Now, employees who had only received small incremental increases in pay with their previous employer may find it easier to catch up in pay to those employees of the opposite sex, or different race or ethnicity, when changing to their new employer.
Sixth, it expressly prohibits employers from forbidding their employees from disclosing their wages or the wages of other employees, inquiring about other employees’ wages, or assisting other employees in asserting their rights under Labor Code section 1197.5. Although the employer cannot limit wage discussions among employees, it is under no obligation to disclose employee wages. [Lab. Code § 1197.5(k)(1).]
Seventh, Labor Code section 1197.5(e) expands recordkeeping requirements on the part of employers to include the employees’ wage rates, job classifications, and other terms and conditions of employment for a period of three years.
Eighth, unlike other sections of the California Labor Code, Labor Code section 1197.5 provides employees with a private right of action to bring a civil suit in court for “reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer, including interest thereon, as well as appropriate equitable relief.” An aggrieved employee claiming a “willful violation” of wage differentiation can benefit from a three-year statute of limitations, rather than the normal two-year statute of limitations. [Lab. Code § 1197.5(i).]
Last, it expressly prohibits an employer from retaliating against employees in the terms and conditions of their employment, and for asserting their rights under this section. Employees are afforded a private right of action for such retaliation, which commences no later than one year after retaliation occurs. [Lab. Code § 1197.5(k)(3).]
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This article is based on the law as of the date posted at the top of the article. This article does not constitute the provision of legal advice, and does not by itself create an attorney-client relationship with Eskridge Law.