What are the laws on equal pay in California?
On January 1, 2016, the Fair Pay Act of 2015 (SB 358) took effect, amending California’s existing Equal Pay Act (Labor Code section 1197.5) by strengthening the requirement that men and women doing “substantially similar” work be paid equally and by providing greater protection against retaliation for workers who talk or ask about pay.
On January 1, 2017, the Wage Equality Act of 2016 (SB 1063) expanded the Equal Pay Act to prohibit unequal pay between employees of different races or ethnicities who do substantially similar work, strengthening existing protections against race-based wage discrimination.
How does the California Equal Pay Act protect me?
California’s Equal Pay Act forbids your employer from paying you less than a coworker of a different sex, race or ethnicity who is performing “substantially similar” work as you, unless this difference can be justified by a legitimate factor that is unrelated to sex, race or ethnicity (examples provided below). Importantly, it does not matter whether your employer is intentionally paying you less. If you and your coworker are performing substantially similar work and your employer cannot explain the pay difference by pointing to a reason that has nothing to do with your sex, race or ethnicity, this may be a violation of the law.
What is included in “pay”?
“Pay” includes things like salary, wages, overtime pay, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, gasoline allowances, reimbursement for travel expenses, and benefits.
What counts as “substantially similar” work?
To determine whether the work done by employees of a different sex, race or ethnicity is “substantially similar” under the Fair Pay Act, you look at the combination of skill, effort, and responsibility required for each position. Your job titles do not need to be the same.
Skill is typically measured by factors such as the experience, ability, education, and training required for performing the job. The focus is on the skills required to do the work in question, not on the skills that the individual employees may have. For example, two accounting jobs could be “substantially similar” even if one of the accountants has a master’s degree in neurobiology while the other does not, since this degree would not be required for the job.
Effort refers to the amount of physical or mental effort needed to perform a job. For example, on some assembly lines, the person at the end of the line must assemble part of the product and examine the completed product to ensure that it is correctly assembled before sending it off to be packaged, whereas the other assembly line positions do not require someone to do this additional work. Given the greater effort required to fulfill the job as the last person on the assembly line, it would not necessarily violate the Fair Pay Act to pay that person more based on this extra effort.
Responsibility refers to the degree of accountability required in performing the job. For example, if two bartenders (of the opposite sex) generally have the same duties but one of them is additionally responsible for counting and recording the amount of cash in the cash registers at the end of the night, it might not be unlawful for their employer to pay that bartender more based on this extra responsibility. In contrast, a very minor difference in responsibilities, like turning on the lights at the beginning of a shift versus turning off the lights at the end of the night, would not likely justify a difference in pay.
“Similar Working Conditions”
For two employees of a different sex, race or ethnicity to be working under “similar working conditions” means that their working environment and situation must be similar and does not mean that they must necessarily work at the same job site or physical location. For example, if two employees of a coffee shop chain perform work that is substantially similar in terms of the skill, effort, and responsibility involved at two different locations, which share the same basic features, sell similar products, and serve a similar volume of customers, they are still working under “similar working conditions.” Therefore, the fact that they work in different locations would not (by itself) justify a difference in their pay. In other words, the employer could not use this fact alone as a defense or excuse for paying the employee of one sex, race or ethnicity more than the other employee.
When is it legal for my boss to pay me less than my coworker?
An employer can pay you less than a coworker of a different sex, race or ethnicity who performs substantially similar work under similar working conditions if it can demonstrate that the pay difference is based on one or more of the following factors:
- a seniority system (a system that bases pay on the time you’ve worked for the company or in a certain position);
- a merit system (an objective system of evaluating and paying employees based on their performance);
- a system that measures earnings by quantity or quality of production (a pay system based on how much you produce at work, such as under a piece rate or commission system); or
- a bona fide (i.e. real or authentic) factor other than sex, such as education, training, or experience as long as this factor is:
- not based on or derived from a sex, race or ethnicity-based differential in compensation (for example, an employee’s height or weight, which often are used as a proxy for sex) and
- Related to the job in question; and
- Consistent with business necessity (which means that it effectively fulfills an overriding legitimate business purpose.)
If the employer is able to demonstrate these three things about the factor it’s relying on to justify a difference in pay, the employee who is being paid less will have a chance to show that an alternative business practice exists that would serve the same business purpose without producing the wage difference.
In addition to showing it relied on one (or more) of the factors above, to justify a pay difference between two employees of a different sex, race or ethnicity who are doing substantially similar work, the employer also will have to demonstrate that: (1) it applied each of the factor(s) reasonably, and (2) that the factor(s) relied upon account for the entire difference in pay.
So how would this all look in practice? Here’s an example:
Suppose two employees (a man and a woman) are hired by an employer at the same time to do the same work under similar working conditions. However, the employer pays the male employee — who had similar skills and education but one more year of prior work experience than the woman at the time of hire — a salary 50 percent higher than what it pays the female employee. If the woman challenges this unequal pay under the California Equal Pay Act, then the employer would have to show several things to defend its pay decision: First, it would have to show that it knew about and actually based the employees’ salaries on their respective levels of prior work experience. Second, it would have to demonstrate that the “prior work experience” on which it relied was related to the job(s) in question. Third, the employer would have to show that it applied this “experience” factor reasonably — in other words, that it was reasonable to pay the man 50 percent more for his one additional year of experience. Finally, the employer would have to demonstrate that the difference in these employees’ prior work experience explained the entire difference in their salaries.
How does California law protect me if I talk about pay at work or complain about being paid less than a coworker of a different sex, race or ethnicity?
Under California’s Equal Pay Act, it is illegal for an employer to forbid an employee from disclosing his or her wages, talking about his or her coworkers’ wages, asking about another employee’s wages, or helping or encouraging coworkers in exercising their right to equal pay.
It is also illegal for an employer to retaliate against (punish) or discriminate against you for engaging in any of this conduct, or for complaining to your employer or to a government agency or court about being paid less than a co-worker of a different sex, race, or ethnicity. For example, it is illegal for an employer to fire you, demote you, reduce your work hours, or reduce your pay because you complained about being paid less than a co-worker of a different sex, race, or ethnicity, or you spoke out against a practice of paying employees unequally.
What should I do if I suspect I’m being paid less than my coworker(s) of a different sex, race, or ethnicity?
If you feel you are being paid less than your coworker(s) of a different sex, race, or ethnicity who are performing substantially similar work as you, there are several steps you can take to address this.
- If you feel comfortable, ask your employer and/or your coworkers about how much they make. Reach out to coworkers you trust who might be willing to share this information with you. Remember that the law protects you in doing this and forbids your employer from punishing you for doing so.
- Record any information you discover about your coworkers’ pay in a notebook or another safe place not accessible to your employer.
- Keep copies of your pay stubs and any other documents about your pay (including benefits packages, etc., if applicable).
- Investigate whether your employer has any written policy regarding how pay decisions are made. If you are in a union, consult with your union about this and review your collective bargaining agreement.
- Consider formally complaining about this to your employer. Your company may have an Equal Employment Opportunity Officer, a Human Resources Department, or another way for you to file a formal, internal complaint. Check your employee handbook for information about complaint procedures. If you are in a union, check with your shop steward or union representative about whether there is a grievance procedure you should follow. If there are no written procedures, ask your employer how you should go about filing a complaint with the company. Submit any complaint you make to your employer in writing and include a date.
- Keep doing a good job and keep a record of your work. Keep copies at home of your job evaluations and any letters or other documents that show that you do a good job at work.
- Consider whether you would like to file a legal claim regarding pay issues and pay attention to filing deadlines. (See below for more information on how to file a legal claim and the time limits for doing so.) If possible, consult with an attorney about any possible legal claims you may have.
How do I file a legal claim for unequal pay and/or retaliation under the Fair Pay Act?
Where do I file a legal claim for unequal wages?
If you wish to file a legal claim regarding unequal pay under the Fair Pay Act, you can do so by filing a lawsuit in court or by filing a claim with the California Division of Labor Standards Enforcement, a state government agency known as the DLSE or “Labor Commissioner.” Whether you file your claim for unpaid wages with the DLSE or go directly to court, the law requires that you do so within a certain time period, generally within two years of the last time you were paid unequally (i.e. the last paycheck in which you were paid less than your coworker).
How far back in time can I recover wages owed if I am successful on my unequal pay claim?
Under the California Labor Code, you can recover unpaid wages for violations that occurred from the period starting two years (or in some cases, three years) prior to the date that you filed your wage claim or lawsuit. If you file a lawsuit, there is another law that could extend the recovery time period to four years. For this reason, if you have been experiencing violations for a long time (that is, you have been receiving unequal pay for many years), the sooner you file a claim, the less pay you stand to lose.
What if I am retaliated against for complaining or asking about equal pay?
If you wish to file a legal claim because of discrimination or retaliation you faced after complaining about unequal pay or engaging in some other form of protected activity under the Fair Pay Act, like discussing your wages with your coworkers, you must initiate the lawsuit within one year after the last retaliatory action taken by your employer against you.
Which agency department or unit investigates claims under the California Fair Pay Act?
To file either an unpaid wage claim or a retaliation complaint under the Fair Pay Act, you can contact the Retaliation Complaint Unit of the DLSE, and it will investigate the alleged violations. For more information, visit http://www.dir.ca.gov/dlse/dlseRetaliation.html.