July 21, 2017

By Gordon E. Bosserman

The California Legislature is considering amending the Fair Pay Act to prohibit an employer from asking about what a job applicant made in compensation from his or her previous employers. (See AB 168) This is not yet the law in California; currently, an employer may ask about previous compensation. Do you know what current law in California requires regarding “equal pay”? If not, here is a brief summary.

In 2016, California enacted the Fair Pay Act. Under that law, an employer was prohibited from paying any of its employees wage rates that were less than the rates it paid to employees of the opposite sex for “substantially similar work.” Beginning January 1, 2017, the law was expanded to cover race and ethnicity. It is now illegal for an employer to pay any of its employees wage rates that are less than the rates it pays to employees of the opposite sex, or based on his or her race or ethnicity, for “substantially similar work.” Under this law, it is not unlawful for an employer to ask about prior compensation. However, it is unlawful for the employer to use that information as the sole basis for unequal pay. Of interest is the fact that the burden is on the employer to demonstrate that the work is not “substantially similar;” and, unlike with the rules against discrimination, the intent of the employer is irrelevant.

“Substantially similar work” is work that, when looked at on a composite basis, i.e., looking at skill, effort and responsibility, is performed under similar working conditions. It does not have to be the exact same job title or function. However, the law does allow pay differences based on: 1) a seniority system; 2) a merit system; 3) a system that measures earnings by quantity or production; or 4) a bona fide factor other than sex, race or ethnicity, such as education, training or experience. In addition, differences based on geographical location may be allowed. Remember, however, that the employer has the burden of proof on these factors.

The law also includes rules that prohibit an employer from preventing employees from communicating with one another about pay and that prohibit retaliation. It should be noted that this part of the law is consistent with the current view of such communications by the National Labor Relations Board. A corollary to this rule is the need to be careful about how an employer treats employee Facebook postings, Tweets and other media postings.

The law provides both administrative and civil remedies, including, in certain circumstances, the award of attorneys’ fees. The foregoing is only a brief synopsis of the law. There are many other related rules that cannot be covered in this limited space.