California Forces Employers to Grapple With Complex Pay Equity Requirements

Passed in 2015 and amended in 2016, California’s Fair Pay Act (FPA) is one of the toughest laws of its kind in the nation. California employers face much greater obligations under the FPA than ever before. The FPA is a complex law that expanded an older law that had been around since 1949. The older law required pay equality between males and females—equal pay for equal work at the same establishment. The FPA changed that by instituting an entirely new measuring stick and adding new protected categories and other requirements.

New Measuring Stick
Substantially Similar Work.  Instead of comparing “equal work” under the old law, employers must now consider pay disparities among employees who perform “substantially similar work.” This means that you must look beyond the job title or job description itself. “Substantially similar work” means “a composite of skill, effort, and responsibility” that is “performed under similar working conditions.”

Any Establishment.  The old law compared workers at the “same establishment.” The FPA removed that limitation so that a fair pay analysis would look across the workforce at any location. An employer with more than one location would have the burden of showing why pay disparities exist across locations.

Burden of Proof.  Pay differentials may be justified by pointing to a seniority system; a merit system; production quality or quantity; or a “bona fide factor other than sex.” These reasons must explain the entire difference. Prior salary alone cannot justify the disparity.

New Protected Categories and Other Requirements

Employers must now pay attention to more than pay disparities between the sexes. As employers, you must also consider race and ethnicity. In addition, the FPA extends the record-keeping requirement from two to three years.

This is not a law that employers can afford to ignore. Violators could potentially face substantial liability, including lost wages and work benefits, liquidated damages, interest, and attorney’s fees and costs. For assistance in understanding how the FPA affects your organization and determining if you are in compliance with the law, contact your Vigilant employment attorney. Not a Vigilant member? Contact Amanda Rusk, Account Representative, at AmandaR@vigilant.org or 800-733-8621.