Legal Update: California Fair Pay Act

Surprise! Surprise! California Law makers have passed another piece of legislation that will affect employers in January 2016, leaving us (the employers) little time to react!

Previous to this bill, California law prohibited employers from paying employees of opposite sex that worked in the same establishment less for equal work on jobs requiring equal skill, effort, and responsibility. The new California Fair Pay Act (Senate Bill 358) was signed by the Governor on October 6, 2015. This law prohibits employers from paying employees of opposite sex less for substantially similar work, when viewed as a composite of skill, effort, and responsibility and performed under similar working conditions.

So what’s the difference? There are a couple of key items to note, this does away with the employees having to work in the same establishment and the definition of “substantially similar” has yet to be fully defined. There are still a few exceptions under this law where employers may show a wage difference based on: a seniority system, a merit system, a system that measures earning by quantity or quality of production, or a bona fide factor, other than sex, where difference in compensation is job related and consistent with business necessity. Make sure these systems are true practices that are consistently delivered across the business.

Other nuances to consider: This law also states that employers may not prohibit employees from: disclosing their own wages, discussing the wages of others, encouraging another employee to exercise their rights to share their wages, and inquiring about another employee’s wages. In short, employees sharing their wage information and employees who ask about other’s wage information cannot be disciplined.

Thankfully, what the law does not say, is that managers, supervisors, or other members of the company have to answer the inquiry of another employee’s wages! Make sure anyone who may have knowledge of employee wage information is aware of that!

If you worry you may have some disparity in your pay rates, it may be best to do an audit with an HR expert such as Peoplescape or even your labor attorney and discuss what changes can be made to ensure compliance beginning January1st!