Mcle Self-study: California's Fair Pay Act
| Jurisdiction | California,United States |
| Author | By Lara C. de Leon and Christopher Olmsted |
| Publication year | 2017 |
| Citation | Vol. 31 No. 2 |
By Lara C. de Leon and Christopher Olmsted
Lara de Leon and Chris Olmsted are shareholders at Ogletree, Deakins, Nash, Smoak & Stewart. Ms. de Leon is co-chair of her firm's Pay Equity Practice Group. She has extensive experience defending employers of all sizes in federal and state litigation and administrative claims. She also regularly advises, counsels and trains clients on a wide array of employment-related matters, including issues of pay equity. Chris Olmsted provides labor law compliance counseling to employers.
For the second time in as many years, the California State Legislature passed significant amendments to California's Equal Pay Act (EPA), codified in California Labor Code § 1197.5. The amendments come amidst a developing national narrative that is focused on gender pay equity. In addition to increased federal regulation focused on pay transparency, states and localities around the country are enacting or updating their laws on pay equity, many of which have been on the books since the early- to mid-1900s.
The California EPA codifies the principle that an employee is entitled to equal pay for equal work, without regard to gender, and was amended in 2015 with the passage of Senate Bill 358 (SB 358), the California Fair Pay Act (FPA), which became effective on January 1, 2016. Later in 2016, the California Legislature further amended the law in two additional ways: (1) AB 1676 provided that prior salary cannot, by itself, be a "bona fide factor other than sex" justifying a pay disparity between employees of opposite genders; and (2) SB 1063 expanded the EPA to prohibit wage differentials based on race or ethnicity, in addition to gender.
The California EPA was originally enacted in 1949. Before the FPA went into effect in 2016, the California EPA provided that an employer may not pay an employee at rates less than those paid to employees of the opposite sex in the same establishment for equal work on equal jobs. The law provided:
No employer shall pay any individual in the employer's employ at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where the payment is made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.
The California EPA closely tracked the federal EPA.1 Some state courts have therefore relied on federal precedential rulings.
Only one California Supreme Court case, Jones v. Tracy School Dist.,2 interpreted the California EPA. In Jones, the court relied on language of the federal statute and federal case law in holding that the California statute limits back pay to the limitations period and provides for an attorneys' fee award.
Unlike some other antidiscrimination laws, neither the state nor federal EPA requires a showing of discriminatory intent. To establish a prima facie case under the federal EPA, a plaintiff must show that the employer paid an employee of one gender more than an employee of the other gender "in the same establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions." In contrast, to establish a claim for compensation discrimination under the Fair Employment and Housing Act, a court will apply the burden-shifting analysis first enunciated in McDonnell Douglas Corp. v. Green,3 which allows discrimination to be inferred from circumstantial facts.4
The state law applied, and continues to apply, to all California employers, regardless of size or number of employees. The law covers all employees, except outside salespersons and certain employees participating in a national service program.5 Employers who violate this law are liable for the wage differential, plus interest, and an equal amount as liquidated damages. The Division of Labor Standards Enforcement may investigate and prosecute an action, or the employee may file a civil suit. In addition, an employer who pays any employee less than an employee of another sex in violation of this law, or who reduces the wages of any employee to comply with the law, is guilty of a misdemeanor and faces a fine up to $10,000.6
In an attempt to strengthen the efficacy of state law to redress the pay gap between men and women, the FPA made several changes to Labor Code § 1197.5. Most notably, the bill changed terminology to permit an employee to prove that he or she received lower wages for "substantially similar" work...
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