United States: California Gender Pay Equality Bill To Be Strictest In Nation?

Representing what media observers call the nation's most aggressive attempt yet to close the salary gap between men and women, SB 358 would substantially broaden California gender pay differential law. Since the bill landed on his desk September 1, all eyes have been on Governor Jerry Brown. Though aide Nancy McFadden tweeted on Women's Equality Day (August 26) that "@JerryBrownGov will sign CA "Fair Pay Act" when it reaches his desk," he has not yet done so.

The Equal Pay Act (29 U.S.C. § 206(d)) has been on the books since 1963. And California has its own gender pay equality law—Labor Code section 1197.5. But California lawmakers think these laws are not enough. According to the legislative intent section of SB 358, the current law contains "loopholes" that make it difficult to prove a claim. And many employees, unaware of existing California law that prohibits employers from banning wage disclosures and retaliating against employees for doing so, are still afraid to speak up about wage inequity.

What difference would SB 358 make?

Current law, Labor Code section 1197.5, prohibits an employer from paying an employee less than employees of the opposite sex who perform the same job, requiring the same skill, effort, and responsibility, in the same establishment, under similar working conditions. Exempt from this prohibition are payments made pursuant to systems based on seniority, merit, or that measure earnings by quantity or quality of production; or differentials based on any bona fide factor other than sex.

SB 358, which its supporters call the "Fair Pay Act," would become effective January 1, 2016. The "Fair Pay Act" would expand pay equity claims by removing the requirement that the pay differential be within the same "establishment," and would modify the "equal" and "same" job, skill, effort, and responsibility standard. The new standard would require only a showing of "substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions." These changes would dramatically lower the bar for an equal pay suit, permitting the plaintiff to compare herself with men working at any location for the same employer, and in any similar—and not the necessarily the same—job.

The "Fair Pay Act" would also require employers to affirmatively demonstrate that the wage differential is based entirely and reasonably upon one or more factors. The "Fair Pay Act" would add to the three existing system-based factors (seniority, merit, or production-based) a "bona fide factor": a factor that is not based on or derived from a sex-based differential in compensation, that is related to the position in question, and that is consistent with a "business necessity" (defined as "an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve"). The "bona fide factor" defense expressly does not apply if the plaintiff demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.

The "Fair Pay Act" would also extend—from two years to three—the employers' obligation to maintain records of wages and wage rates, job classifications, and other terms of employment.

Talk Is Cheap?

The "Fair Pay Act" also would remind employers that they are not to forbid employees to disclose their own wages, discuss others' wages, ask about others' wages, or aid or encourage other employees to exercise their rights under Labor Code section 1197.5. Labor Code section 232 already contains a similar prohibition, but does not specifically prohibit inquiring about the wages of other employees if the purpose of that inquiry is to exercise the right to equal pay for equal work. In a small nod to employers, the "Fair Pay Act" would not require them to disclose wages.

The "Fair Pay Act" would expressly prohibit employers from discharging, discriminating against, or retaliating against employees who invoke or assist in the enforcement of Labor Code section 1197.5.

New Methods of Enforcement, Too...

Current law vests enforcement authority in the Department of Labor Standards Enforcement, which it can exercise through the administrative process or through a civil action brought on an individual or class basis. Current law does not require employees to exhaust this administrative process before suing, unless the employee consents to the DLSE's bringing an action. Current law authorizes an employee who chooses to sue directly in court—provided the employee does so within two years, or three if the violation is "willful"—to recover the balance of wages, interest, liquidated damages, costs, and reasonable attorney's fees.

The "Fair Pay Act" would create another private right of action—this one with a one-year statute of limitations—by employees who have been discharged, discriminated against, or retaliated against for engaging in any conduct protected by the statute. These employees could seek reinstatement and reimbursement for lost wages and benefits, interest, and "appropriate equitable relief." The "Fair Pay Act" bill would also give these employees an alternative: they could file complaints with the DLSE alleging employer violations of the new prohibitions on discrimination, retaliation, and restricting employee wage-information discussions.

What's the Word on The Street?

The list of the bill's supporters is long. Conspicuously dissenting is the California National Organization for Women, which opposes this bill because it lacks protections for wage discrimination with respect to such categories as race, ethnicity, LGBTQ status, and disability status. The bill's author, Hannah-Beth Jackson, has said she expects to see across-the-board changes for all employees after the bill is signed into law.

And even the California Chamber of Commerce has supported the bill, stating it "provides a great balance between making sure there is no gender inequity in pay, but also leaving flexibility for an employer to reward employees for education, skill, training experience with regard to compensation as well." Cal Chamber cites the inclusion of a defined "bona fide factor" test as a clarification that would help employers "navigate their pay structure" and "avoid unnecessary litigation" about what business purposes would qualify as a legitimate factor.

Workplace Solution (what to do now?)

How can employers fortify pay structures against scrutiny under the new standards? Employers that want to understand and mitigate their risks can consider conducting an attorney-client privileged analysis of employee pay. Using a multiple regression analysis, for example, an employer may determine how well permissible considerations of skills, effort, responsibility, seniority, merit, quality or quantity of production, education, training, experience, and other factors explain existing pay differentials. While we find that employers don't intentionally pay women any less, pay differentials may appear to be superficially correlated with sex as a result of inconsistent processes for setting pay, especially starting salaries. Seyfarth has an experienced group of attorneys and analysts who specialize in conducting pay analysis. If you consult anyone to conduct an analysis, consider establishing an attorney-client privilege protocol to maintain confidentiality and create protections from disclosure in litigation.

In Related News...

Two other bills addressing the same issue are still alive: AB 1017 and AB 1354. AB 1017 would add section 432.3 to the Labor Code, to prohibit an employer from seeking salary history information about an applicant for employment. AB 1354 would amend Government Code section 12990 to require, of each employer with over 100 employees that is or wishes to be a state contractor or subcontractor, a nondiscrimination program that includes policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection procedures, and a workforce analysis that contains the total number of workers, the total wages, and the total hours worked annually, with a specific job category identified by worker race, ethnicity, and sex. AB 1354 would require that this information be submitted to the DFEH. AB 1354 cites the OFCCP's August 2014 Notice of Proposed Rulemaking, which required federal contractors with greater than 100 employees to submit an annual equal pay report on employee compensation.

Stay tuned to calpeculiarities.com: we are following each of these bills and others making California all that much more peculiar.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.