Mcle Self-study: Women's Wages, Pay Equity, and Data Reporting

• Jurisdiction: California,United States
• Author: Phyllis W. Cheng
• Publication year: 2022
• Citation: Vol. 36 No. 4

MCLE SELF-STUDY: WOMEN'S WAGES, PAY EQUITY, AND DATA REPORTING

AUTHOR^*

Phyllis W. Cheng

INTRODUCTION

In 2015, Governor Jerry Brown signed into law the California Fair Pay Act¹ (CFPA or Act) to close the historic wage gap between women and men by: 1) requiring the use of bona fide factors to set wages; 2) expanding wage comparisons beyond local worksites; and 3) protecting employees' right to inquire about and discuss their wages.²

Since its enactment, several amendments have broadened and clarified the Act. In addition to gender, now the CFPA also bars wage gaps based on race and ethnicity for performance of substantially similar work.³ Another amendment to the Act clarifies that prior salary cannot, by itself, justify any disparity in compensation under the bona fide factor exception. Further, an employer is required, upon reasonable request, to provide the pay scale for a position to an applicant for employment.⁴ As amended, the Act also defines "employer" to mean

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both public and private employers, except public employers would not be subject to the misdemeanor provision for reducing the wages of any employee to comply with the CFPA's prohibition.⁵

This article examines the gender-based wage gap, development of fair pay law, requirements under the California Fair Pay Act, new requirements for pay data reporting, and best practices for compliance.

THE WAGE GAP

According to the United States Bureau of Labor Statistics, in 2021, female full-time wage and salary workers earned 83.1% ($912) of the usual weekly earnings of their male counterparts ($998).⁶ Even though the gender wage gap has narrowed since 1979 (when women's earnings were 62% of men's), the ratio after 35 years remains significant for women and men at all age groups and within racial-ethnic groups.⁷ White women earned 82.2% as much as their male counterparts, compared with 94.1% for Black women, 78.5% for Asian women, and 87.6% for Latinas.⁸

According to the American Association of University Women (AAUW), the COVID-19 pandemic's disproportionate economic toll on women, most notably women of color, will have economic ramifications for years—compounding the inequities of the existing gender wage gap.⁹ The AAUW reports that:¹⁰

• Between February and April 2020, women's unemployment rate rose by 12.8%, compared to 9.9% for men.
• Between the third quarter of 2019 to the third quarter of 2020, unemployment rose from 5.4% to 12.7% for Black women; 2.5% to 11.6% for Asian women; 4.8% to 12.5% for Latinas; and 3.7% to 8.6% for White women.
• Mothers of young children have lost jobs at three times the rate of fathers. Mothers of children under12 lost nearly 2.2 million jobs between February and August, a 12% drop: fathers saw a 4% drop of about 870,000 jobs.
• In the third week of July 2020, 32.1% of unemployed women ages 25 to 44 were not working outside the home due to childcare demands, compared to only 12.1% of men in the same group.

This line graph from the U.S. Bureau of Labor Statistics shows the ratio of women's to men's earnings, by race and Hispanic ethnicity, for full time workers from 2000 to 2021.
Image description added by Fastcase.

Source: U.S. Bureau of Labor Statistics

As of March 2021, California ranks fourth with a gender wage gap of 88%, according to the National Women's Law Center.¹¹

Various studies found that factors such as educational attainment, experience, demographic characteristics, job type, industry, or union status explain about half of the wage gap, but about 40% of the gap is not explained by such factors.¹² If women had the same education, experience, demographic characteristics, industrial and occupational distribution, and union coverage as men, the wage ratio would rise to about 91% of men's wages, with an 8% unexplained difference that researchers suggest could be influenced by discrimination.¹³

Part of the wage gap can be explained by the segregation of jobs. Jobs held mainly by women are paid less, in part because they are held mainly by women.¹⁴

FEDERAL EQUAL PAY ACT

The federal Equal Pay Act of 1963 prohibits covered employers from paying lower wages to female employees than male employees for "equal work" on jobs requiring "equal skill, effort, and responsibility" and performed under similar working conditions at the same location.¹⁵

The much heralded Lilly Ledbetter Act of 2009 amended the Civil Rights Act of 1964 by resetting the 180-day

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statute of limitations for filing an equal pay lawsuit with each new paycheck affected by the underlying discriminatory action.¹⁶ However, the Ledbetter Act did not break new ground on the pay equity front. The proposed federal Paycheck Fairness Act, a pay equity initiative, has stalled in Congress for many years.¹⁷

CALIFORNIA FAIR PAY ACT

The California Equal Pay Act,¹⁸ which has mandated equal pay for equal work since 1949, is virtually...