California's Equal Pay Act & Fair Pay Act

For decades now, the California Equal Pay Act has prohibited an employer from paying its employees less than employees of the opposite sex for equal work. However, in 2015, Governor Brown signed the California Fair Pay Act, which strengthened the Equal Pay Act in a number of ways and signaled California’s commitment to achieving real gender pay equity.

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The new changes were effective January 1, 2016, and most the significant changes to the Equal Pay Act are:

• Requiring equal pay for employees who perform “substantially similar work,” when viewed as a composite of skill, effort, and responsibility.

• Eliminating the requirement that the employees being compared work at the “same establishment.”

• Making it more difficult for employers to justify inequities in pay through the “bona fide factor other than sex” defense.

• Ensuring that any legitimate factors relied upon by the employer for pay inequities are applied reasonably and account for the entire pay difference.

• Explicitly stating that retaliation against employees who seek to enforce the law is illegal, and making it illegal for employers to prohibit employees from discussing or inquiring about their co-workers’ wages.

• Extending the number of years that employers must maintain wage and other employment-related records from two years to three years.

Each year since January 1, 2016, has brought further amendments to the equal Pay Act. Effective January 1, 2017, race and ethnicity were added as protected categories. California law now prohibits an employer from paying its employees less than employees of the opposite sex, or of another race, or of another ethnicity for substantially similar work. The provisions, protections, procedures, and remedies relating to race- or ethnicity-based claims are identical to the ones relating to sex. In addition, employers are prohibited from using prior salary to justify any sex-, race-, or ethnicity-based pay difference.

Effective January 1, 2018, the Equal Pay Act now covers public employers. Also effective January 1, 2018, and on January 1, 2019, Labor Code section 432.3 was enacted (and later clarified) to prohibit employers, with one exception, from seeking applicants’ salary history information and requiring employers to supply pay scales upon the request of an applicant. 

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                                                                                                     Common FAQ:

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Q:  What does the current California Equal Pay Act provide?

A:  The amended Equal Pay Act prohibits an employer from paying any of its employees wage rates that are less than what it pays employees of the opposite sex, or of another race, or of another ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.

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Q:   What does “substantially similar work” mean?

A:  “Substantially similar work” refers to work that is mostly similar in skill, effort, responsibility, and performed under similar working conditions. Skill refers to the experience, ability, education, and training required to perform the job. Effort refers to the amount of physical or mental exertion needed to perform the job. Responsibility refers to the degree of accountability or duties required in performing the job. Working conditions has been interpreted to mean the physical surroundings (temperature, fumes, ventilation) and hazards.

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Q:  What are the key differences between the former Equal Pay Act and the Equal Pay Act, as amended?

A:  The main differences are that the current law:

• also prohibits race-, or ethnicity-based wage differences;

• eliminates the requirement that the jobs that are compared must be located at the same establishment;

• replaces a comparison of “equal” work with a comparison of “substantially similar” work;

• makes it more difficult for employers to justify unequal pay based on sex, race, or ethnicity;

• adds new express anti-retaliation protections for workers who assist employees with bringing claims under the Act;

• provides that an employer cannot prohibit workers from disclosing their wages, discussing the wages of others, or inquiring about others’ wages;

• prohibits employers from relying on an employee’s prior salary to justify the sex-, race-, or ethnicity- based pay difference.

Q:  Under the current law, what do employees have to prove to prevail on a Equal Pay Act claim?

Under the current law, an employee must prove that they are being paid less than an employee or employees of the opposite sex, of another race, or of another ethnicity who is performing substantially similar work. Once an employee makes this showing, the employer must then prove that it has a legitimate reason for the pay difference.

Q:  Can an employee file a claim if the person who earns more than they do has a different job title?

A:  Yes, because the Equal Pay Act compares jobs that are “substantially similar,” the job titles that are being compared do not have to be the same. What is important is whether the work itself is “substantially similar.”

Q:  How is “wage rates” defined?

A:  Although the law does not specifically define “wage rates,” the term refers to the wages or salary paid, and also other forms of compensation and benefits.

Q:  Under the current law, how may an employer defeat an Equal Pay Act claim?

A:  Under the current law, an employer can defeat an Equal Pay Act claim by proving that the difference in pay for substantially similar work is due to:

• seniority;

• merit;

• a system that measures production; and/or

• a “bona fide factor other than sex, race, or ethnicity.”

In addition, an employer must show that it applies the above factor(s) reasonably and that the factor(s) accounts for the entire difference in wages.

Under the Equal Pay Act, an employer may not justify any pay difference between employees of the opposite sex, or employees of different race or ethnicity based on an employee’s prior salary. An employer may make a compensation decision based on a current employee’s existing salary, however, any wage differential resulting from that compensation decision must be justified by one or more of the factors listed above.

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Q:  Under the current law, how is the “bona fide factor other than sex, race, or ethnicity” applied?

A:  Under the current law, an employer may defeat an Equal Pay Act claim by proving that the wage differential is due to a bona fide factor other than sex, race, or ethnicity, but to succeed on this defense, the employer must also prove that the factor is

• not based on or derived from a sex-, race-, or ethnicity- based factor;

• job related; and

• consistent with a business necessity.

Q:  What are some examples of a “bona fide factor other than sex, race, or ethnicity”?

A:  Examples of a “bona fide factor other than sex, race, or ethnicity” include:

• Education;

• Training; or

• Experience, among other bona fide factors.

Q:  Are public employers covered by the Equal Pay Act?

A:  Effective January 1, 2018, public employers, such as state, county, and local agencies and entities, are covered by the Equal Pay Act. Beginning January 1, 2018, an employee of a public employer may file an Equal Pay Act claim against his or her employer.

Q:  When does an employee need to file a Equal Pay Act claim?

A:   Under the Equal Pay Act, an employee must file a claim within two years from the date of the violation. If the violation is willful, then an employee has three years to file. Each paycheck that reflects unequal pay is considered a violation for the purpose of calculating the deadline for filing.

For example, if an employer begins to pay a female worker less than a male worker for substantially similar work in January 2016, and the employer cannot justify the unequal pay with any available defenses, for a non-willful violation, the female worker has until January 2018 to file a claim to seek recovery going back to January 2016. If she waits until January 2019 to file a claim, she can seek recovery going back only two years, or January 2017.

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To use another example, if an employer begins to pay a female worker less than a male worker for substantially similar work in January 2016, but the employer subsequently starts to pay the female worker the same as the male worker beginning in January 2017, and the Equal Pay Act claim is filed in January 2019, the female worker can only go back two years for a non-willful violation, or back to January 2017. Thus, in this example, the female worker has missed the deadline for seeking remedies.

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Q:  Where can an employee bring a claim to enforce the Equal Pay Act? Must the employee file an administrative claim before filing a case in court?

A:  Employees who have experienced an Equal Pay Act violation can file a claim with the Labor Commissioner’s Office or file an action in court. The employees does not have to file a claim with the Labor Commissioner’s Office before filing an action in court.

Depending on the nature of the claim, the employee may also file a claim with the California Department of Fair Employment and Housing.

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Q:  What happens after an employee files a claim with the Labor Commissioner’s Office?

A:  The Labor Commissioner’s Office investigates your claim and makes a determination as to whether or not the employer violated the Equal Pay Act. If the Labor Commissioner’s Office determines that no violation occurred, the claim will be dismissed. If the Labor Commissioner’s Office determines that a violation occurred, it will make a demand for remedies. If the employer fails to comply with the Labor Commissioner’s demand for remedies, then the Labor Commissioner files a civil action in court to try to recover any wages, interest, and liquidated damages owed to you.

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Q:  Does an employee need to file a claim with the California Department of Fair Employment and Housing (DFEH)?

A:  No. The DFEH enforces the California Fair Employment and Housing Act, which prohibits discrimination based on sex, race, national origin, ancestry, in addition to other protected categories. An employee may, but is not required to, file a claim with the DFEH if the employee is only claiming unequal pay based on sex, race, or ethnicity. 

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Q:  Can an employee file a claim under the Equal Pay Act anonymously or in a group with others?

A:  The law states that the Labor Commissioner’s Office shall keep the name of the employee who files an Equal Pay Act claim confidential until it establishes the validity of the claim. However, the Labor Commissioner may reveal the name of the claimant if needed to investigate the claim.

Employees who are similarly affected may all file claims against the same employer. These claims may be assigned to the same investigator.

Q:  What does an employee obtain if they prevail in their Equal Pay Act claim?

A:  Under the Equal Pay Act, an employee can recover the difference in wages, interest, and an equal amount as liquidated damages, and if the employee files a case in court, the employee can also recover attorney’s fees and costs.

Q: What can employers do to evaluate whether they are paying employees in accordance with the Equal Pay Act?

A:  Employers that want to be proactive about their compliance with the Equal Pay Act can start by evaluating the jobs that are substantially similar and assessing whether the men and women who perform those jobs are paid the same.

Q: How long must an employer keep records of employee wages and wage rates?

A:  Under the amended Equal Pay Act, an employer must keep records of wages, wage rates, job classifications, and other terms and conditions of employment for a period of three years.

Q:  Can an employee ask the employer how much other employees are paid?

A:  Yes, an employee can ask their employer about how much other employees are paid, however, the law does not require an employer to provide that information.

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Q:  Can an employer retaliate against the employee for asking about other employees’ wages?

A:  No. The employer may not prohibit an employee from disclosing their own wages, discussing the wages of others, inquiring about another employee’s wages, or aiding or encouraging any other employee to exercise rights under the Equal Pay Act. Thus, an employer may not retaliate against an employee for engaging in such conduct.

Q:  May a prospective employer ask a job applicant what they are currently paid or was paid in the past?

A: No. Effective January 1, 2018, the law prohibits an employer from, either orally or in writing, personally or through an agent, asking any information concerning an applicant’s salary history information, which includes compensation as well as benefits. An employer may ask an applicant for his or her salary expectations for the position, as distinguished from asking what the applicant earned in the past. Furthermore, the law prohibits an employer from relying on an applicant’s salary history information as a factor in determining whether to offer employment at all or in determining what salary to offer.

An exception to this provision is salary history information that is disclosable to the public under either the California Public Records Act or the federal Freedom of Information Act.  Thus, an employer may seek the salary history information of an applicant for employment during times when the applicant worked for a public employer and the applicant’s salary was disclosable.

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All employers should review their job applications and train hiring personnel to ensure compliance with the law. Make sure to remove any questions seeking an applicant’s current or past salary.

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Q:  May an employee voluntarily disclose their salary history information to a prospective employer?

A:  An applicant may voluntarily disclose their salary history information to a prospective employer, as long as it is being done without prompting from the prospective employer. If an applicant voluntarily, and without prompting from the employer, discloses salary history information, the prospective employer may factor in that voluntarily disclosed information in determining the salary for that person.

An employer, however, is prohibited from relying on prior salary to justify a pay difference between employees of the opposite sex, or different race or ethnicity, who are performing substantially similar work because that violates the Equal Pay Act.

Q:  Is an employer required to provide the pay scale for an open position to an applicant for that position?

A:  Upon a reasonable request, an employer shall provide the pay scale for a position to an applicant applying for employment. For example, a request made after an applicant has completed an initial interview with the employer.

Q:  How is “pay scale” defined?

A: The law defines “pay scale” to mean a salary or hourly wage range for a position. An employer who intends to pay a set hourly amount or a set piece rate amount, and not a pay range, may provide that set hourly rate or set piece rate in response to a reasonable request for a pay scale. An employer who fails to provide a pay scale in response to a reasonable request for a pay scale is in violation of the law.

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Q:  Is an employee protected from retaliation if they complain about an Equal Pay Act violation?

A:  Yes, the Equal Pay Act specifically prohibits an employer from retaliating against an employee for “any action taken by the employee to invoke or assist in any manner” with the enforcement of the Equal Pay Act.

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Q:  What is the deadline to file a retaliation claim with the Labor Commissioner?

A:  While an Equal Pay Act claim can be filed within two years of the date of the violation or three years, if willful, an employee must file a retaliation claim with the Labor Commissioner within one year of the retaliation. Alternatively, an employee may file a civil action for retaliation in court within one year of the retaliation. An employee does not have to file a retaliation claim with the Labor Commissioner before filing an action in court.

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Q:  What does an employee obtain if they prevail in their retaliation claim?

A:  An employee who prevails in a retaliation claim may be awarded reinstatement, back pay, interest on back pay, and possibly other remedies.

If you have any additional questions or need more information about your rights or responsibilities regarding equal pay, please contact me for a FREE confidential consultation at (916) 333-4653 or Stephen_Fiegel_Esq@comcast.net.