United States: California Legislature Draws Inspiration From UK Pay Gap Reporting Requirements With New Bill

Last Updated: July 28 2017
Article by Equal Pay Pulse

Authored by Lauri Damrell, Leo Moniz and Alex Mitchell.



The California legislature is poised to continue its trailblazing streak of equal pay legislation with a new pay gap reporting bill. If approved and signed by Governor Jerry Brown, AB 1209 would add Section 2810.7 to the California Labor Code and require certain large employers to report pay gap statistics on an annual basis beginning in 2019.

The proposed legislation follows on the heels of a new UK law imposing similar requirements on employers (see our previous coverage here). On May 31, 2017, the California Assembly passed a version of AB 1209 that would require employers with 250 or more employees to collect information including the difference in mean and median salary between male and female employees for each "job classification or title."  Employers would have to post the information on an employer-maintained website accessible by the public.

On July 5, 2017, the California Senate introduced amendments to AB 1209, making it applicable to employers with 500 or more employees. The Senate version of the bill would require covered employers to submit pay gap statistics to the California Secretary of State to be published on a public website, but eliminates the mandate that employers publish the information on their own websites.

However, as opponents of such reporting requirements have pointed out, without proper context and analysis, pay statistics can be misleading. To illustrate, consider this hypothetical pay data for sales consultants at imaginary Company XYZ:

Female Workers Salary Male Workers Salary
Faith 100,000 Marvin 75,000
Farrah 90,000 Matt 75,000
Fatima 75,000 Mel 75,000
Fern 40,000 Mike 75,000
Francine 30,000 Mohamed 75,000
Mean: 67,000 Mean: 75,000
Median: 75,000 Median: 75,000

In this example, the mean salaries for female and male workers suggest a pay gap of nearly 10% in favor of men, while the median values say little about workforce pay differentials. The raw data tells a potentially different story altogether, with 60% of women earning as much or more than their male counterparts.

Without controlling for additional variables, the pay gap information above gives an imperfect description of gender pay equity at Company XYZ. The differences in mean salaries between female and male workers might be explained by an innumerable combination of lawful pay factors, such as tenure, education and performance.  In theory, discrimination could also be at play, but discrimination might be based on factors other than (or in addition to) gender.

In some large workplaces, the problem of outliers—extreme data points that skew aggregate values in one direction or the other—may be diminished; more employees means more data points, and more data points means a reduction in the relative weight of individual extreme values in a statistical analysis. But other workforces covered by the proposed legislation are likely to have a small number of employees in certain positions.  In such cases, employers may find it challenging to provide meaningful pay gap information to the government and the public.

Advocates and critics alike have proposed various solutions to pay gap reporting issues. One possible solution is the use of a multiple regression model that controls for non-gender related variables, but such analysis is costlier and more time-intensive than mean and median calculations.  Also, many employers don't presently collect and maintain in a central repository all of the demographic and pay factor information that would be needed for a reliable multiple regression model.  Other proposals, such as supplementing the mean and median estimates with raw data or additional statistical values, could create privacy concerns.  Simply put, the more comprehensive the data provided to the public, the more likely it can be traced to particular employees.

Revisiting our Company XYZ example, the mean and median figures fail to capture critical aspects of the employer's compensation dynamics. Varying interpretations of the raw data could lead to alternate, and in some cases contradictory, conclusions about pay discrimination and whether female employees are favored or disfavored at Company XYZ.  That women like Faith and Farrah are the employer's most highly-compensated employees might matter in the context of a pay equity analysis, as Fern and Francine's respective experience and aptitudes certainly would.

As AB 1209 continues to wind its way through the legislature, it remains to be seen whether and how such concerns will be resolved. In the meantime, stay tuned as we continue to monitor this and other developments in equal pay legislation.

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.

Authors
Events from this Firm
22 Aug 2018, Webinar, New York, United States

On July 1, 2018, new regulations from California’s FEHC went into effect, clarifying protections from national origin discrimination.

5 Sep 2018, Seminar, New York, United States

This seminar will discuss a variety of topics concerning the responsibilities and conduct of gatekeepers and will provide practical advice dealing with the government’s increased policing of the activities of gatekeepers.

13 Sep 2018, Speaking Engagement, New York, United States

Employment partners Tim Long and Erin Connell will be participating in PLI’s Cutting-Edge Employment Law Issues 2018: The California Difference.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions