Existing California and federal law already prohibit employers from paying women less than men for the “same jobs.” But many feel that these laws were proving ineffective in California – citing data including a U.S. Census Bureau report this year that found that full-time women employees in California are paid substantially less (a median 84 cents for every dollar) than their male counterparts.
The new law, referred to as the California Fair Pay Act, has as its stated purpose attempting to close this gap and broaden the scope of existing equal pay laws by mandating that employers pay male and female employees the same amount for “substantially similar work” under similar working conditions. So, employees performing “substantially similar work” under similar working conditions must be paid the same amount even if they have different titles or work at different locations. This new standard will likely make it significantly easier for employees to bring a pay discrimination claim under the California law than under the federal Equal Pay Act. The law also prohibits retaliation against employees who complain of pay inequities.
California employers should review and update their existing compensation systems and policies to ensure that differences in pay are reasonably related to legitimate business factors (like merit or seniority), and not based on gender. This is especially important because we anticipate that new legislation will lead to a spike in litigation — especially given that plaintiffs will have an easier task in establishing that they were performing “substantially similar work” rather than the “same job.”