What is California Equal Pay? Who Does it Include?

Did you know that pay disparities cause working women in California to lose over $33 billion each year?¹ This problem is even worse for women of color. In 2015, Governor Brown noted that, “Sixty-six years after passage of the California Equal Pay Act, many women still earn less money than men doing the same or similar work.”² In response to this enduring injustice, California law makers have implemented and strengthened California’s Equal Pay Act, to ensure that workers are paid according to their work and not their gender. Traditionally, the California Equal Pay Act has prohibited an employer from paying its employees less than employees of another sex for equal work.³ Equal work, or “substantially similar work” as it is written by law, refers to work that is mostly similar in skill, effort, responsibility, and performed under similar working conditions. Importantly, workers with different job titles may still show they performed “substantially similar” work according to the Equal Pay Act.

Although laws addressing wage disparities between sexes have been around for decades, little to no legislation prohibited pay discrepancies based on race or ethnicity until recently. This means that for over 60 years of its existence, California’s Equal Pay Act failed to include one of the largest factors for wage inequality – race and ethnicity. As of 2017, California amended its Equal Pay Act to make race and ethnicity protected classes. This change reflected an understanding that wage discrimination is not confined to women. The consequences of biases are multifaceted, complex, and are present in every aspect of our society. Importantly, women of color are paid less than white women.⁴ Additionally, men of color are often paid less than white men and now have a claim under the amended Equal Pay Act. The addition of race and ethnicity begins the process of making pay equity in California more inclusive. Even so, it is important to recognize that much more can be done, including expanding equal pay protections to other vulnerable communities such as LGBTQ and disabled workers. In doing so, California Equal Pay will begin to embrace more fully and meaningfully the central ideal that no employee should be denied an equal wage for an equal day of work.

As amended today, the California Equal Pay Act prohibits an employer from paying any of its employees’ wage rates that are less than what it pays employees of the opposite sex, or of another race, or of another ethnicity for substantially similar work, assessed by skill, effort, and responsibility, and performed under similar working conditions.

What Does an Employee Need to Show?

An employee must prove that they are being paid less than employees of the opposite sex, of another race, or of another ethnicity who are performing substantially similar work. Therefore, the focus of litigation under the Equal Pay Act is generally whether jobs are, in fact, comparable. See, for example, in Hall v. County of Los Angeles, where the central issue was finding the proper “comparator class” for a female plaintiff claiming gender-based wage discrepancies.⁵ Importantly, employees do not have to work in the “same establishment” to be comparable. This can be helpful if an employee is employed by a large company with various workplaces. Once the employee makes this showing, it is up to the employer to prove that they have a legitimate, non-discriminatory reason for the pay difference. If an employer can make this showing, then it is up to the employee to prove that the employer’s reason is a pretext.

What Defenses Can I Expect from an Employer?

Under California’s Fair Pay Act, even after an employee shows that they are performing substantially similar work and earning less than employees of the opposite sex, different race, or ethnicity, employers may still escape liability by showing that the wage gap is based on a seniority system, merit system, production-based system, or another bona fide factor unrelated to sex, race, or ethnicity. A bona fide factor is anything other than sex, race, or ethnicity, that is job-related and consistent with a business necessity. A business necessity is a factor that is required for safe and efficient operation of the business, that effectively fulfills the business purpose it is supposed to serve, and that is the only available factor that would accomplish the business purpose. For example, an employer might argue that the pay difference between employees is based on education, training, or experience. Importantly, the bona fide factor must account for the entirety of the pay difference.

Additionally, as of January 2018, Section 432.3 of the California Labor Code amended the Equal Pay Act. As amended, the Act provides that an employer may not justify any pay differences based on an employee’s prior salary. Specifically, Section 432.3 prohibits any employer from asking a prospective employee for their salary history.

What if I am Retaliated Against?

Significantly, California’s Equal Pay Act was amended in 2015 to explicitly prohibit an employer from discharging, discriminating, or retaliating against, any employee because they assert their rights under the Equal Pay Act. Additionally, California law prohibits retaliation against employees for discussing their wages.

To recover wages for retaliation, an employee has one year following the unlawful action to file a lawsuit against their employer. This addition was intended ensure effective enforcement and to empower employees to discuss pay without fear.