On September 18, 2015 the California Senate unanimously passed legislation intended to help eliminate gender pay discrimination in the workplace. This will have an impact on CA labor law. According to Nancy McFadden, executive secretary to Gov. Jerry Brown, the governor will sign the equal pay bill when it hit his desk.
CA Labor Law – Preventing Unequal Pay by California Employers?
The law, Senate Bill 358, passed on a 39-0 vote as Republicans supported the legislation in a unanimous bipartisan vote what they view as a workplace fairness law that would not unjustly burden employers with litigation.
The legislation by Sen. Hannah-Beth Jackson would prohibit employers from retaliating against employees who inquire about coworker pay. Though being touted as a positive aspect of the law, it also requires employers to show that any difference in pay is related to the job and not some ancillary trait like “a charming personality or impressive golf game.”
While this may appear benign enough, some observers wonder whether this may open the door to additional claims and further litigation despite the intentions of the law’s authors.
This CA Labor Law Preferable to the Federal Version
In Washington, Democrats have pushed the Paycheck Fairness Act (S.862, H.R.1619) since 1997. The federal bill is similar to the recent California law except that, among other issues, it would expand an employees’ ability to receive punitive damages from her employer. That provision is not part of the California legislation.
Supporters of California's equal pay law stress the fact that it does not authorize punitive damages, and that this would not change under the SB 358. One California Republican Senator noted the new legislation would “avoid a climate of unnecessary litigation.” She called the proposed federal law, however, “more extreme and less realistic.”
In the U.S. Congress, Republicans have recently introduced a scaled-down equal pay measure. However, the Democrats haven’t yet embraced it. Earlier versions of the federal bill also called for the federal government to collect pay information on employers. This, too, has engendered vigorous opposition and debate on the national level.
Do We Need More CA Labor Laws on Equal Pay?
SB 358 will change the wording of existing law which now requires “equal pay for equal work”, to read equal pay for "substantially similar" work. While employers are still allowed to pay workers more money based on merit, seniority and other quantifiable factors, it hopes to narrow a loophole that now includes the phrase "any bona fide factor". This has purportedly been used as an excuse to pay men more than women for doing substantially the same work. This description is considered to be so broad that few women could successfully challenge it.
Both the state of California and the federal government already have equal-pay laws prohibiting employers from paying females workers less than men for “equal work.” California passed its bill in 1949; Congress approved a similar bill in 1963. However, a wage gap persists, in California.
According to the Anita Borg Institute, in Silicon Valley, which is often seen as a meritocracy, women working in the technology sector earn 70 percent of what their male counterparts make, on average.
The argument for the new legislation is that speaking out over perceived gender bias in one’s salary can backfire with retaliation.
The legislation comes just five months after Ellen Pao lost her three-year battle with Silicon Valley's most prestigious venture capital firm, Kleiner Perkins. The case made national headlines and highlighted Silicon Valley's problems with gender equality.
Some studies have been purported to show that a woman in California working full time makes 84 cents to every dollar a man earns, according to the San Francisco-based civil rights group Equal Rights Advocates.
The Real Impact of the Equal Pay Issue
Even with equal pay laws in force since 1949 and 1963, relatively few women in California have made pay discrimination claims against their employers. According to a review by Equal Rights Advocates in 2013 only six women in California filed claims over their pay.
One explanation put forward is the lack of transparency among employees regarding co-worker’s salaries. "We have to ask why aren't women saying anything about it?" said Jennifer Reisch, legal director at Equal Rights Advocates. She points out that, "there are very few women who actually know how much they make compared to men doing similar work."
This is contentious aspect of the equal pay debate and while the new law does not require disclosure of co-worker salaries, supporters of the measure hope it will begin to change what they call the "culture of secrecy" in the private sector about salaries.
Some of the existing disparity in salaries may be attributed to common employment such as establishing starting salaries which rely on the earnings of a new hire’s last job as a basis. This can lead to an inequity in pay simply as a carryover from a previous pay inequity, according to supporters of the new law.
"Over time, what we see is women consistently starting off behind men from the get go," according to Reisch. "What may start off as a barely noticeable difference over time really grows and is the reason why over a woman's lifetime, a woman is losing close to a half a million dollars due to the wage gap."
If you have questions regarding California labor law requirements, or other HR issues and practices, let us help you in managing your HR needs, payroll processes, and staying on top of compliance demands. Get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.