Senate Bill 358 Amends California’s Equal Pay Act
As of the first of the year, Employers have more to worry about in California. New legislation often is made effective January 1 and over the next few months, we will note some of the changes that have occurred that will impact businesses, with regard to employment related laws. Senate Bill 358 is one example of a change in the law. This bill targets gender-based wage gaps in California and is similar to the federal Paycheck Fairness Act (SB 84) pending at the federal level.
Prior to January 1, California law prohibited the Employers from paying less to members of the opposite sex who performed equal work in the “same establishment”. The new law eliminates the “same establishment” requirement, and revises the definition of “equal work”. The new law prohibits paying less for “substantially similar work, when viewed as a composite of skill, effort and responsibility” performed under similar working conditions. Because workplaces are now highly differentiated, the legislature believed that a comparison in only one (1) work site was no longer valid.
Likewise, Employers had previously been allowed to pay different wage rates based on seniority, merit or because of quantity or quality; as long as it was a “bona fide factor other than sex”. The new law retains the exceptions based on seniority, merit and quantity/quality, but significantly revises the “bona fide factors other than sex”. Employers will now have to prove that a wage differential is not based on or derived from a sex-based differential, and that it is consistent with “business necessity” (such as a difference in education, training or experience) that is job-related to the position in question.
The new law also provides that the business necessity must be an “overriding legitimate business purpose, such that the factor relied upon effectively fulfills the business purposes it is supposed to serve”. This defense will not apply if the employee can demonstrate that an alternative employment practice existed, and would serve the same business purpose without producing a wage differential.
Finally, the law requires an Employer to satisfy two (2) new criteria:
That each factor relied on is applied reasonably; and
That the factors relied upon account for the entire wage difference.
Employers should review wage/pay scales of their workers and be aware of any “wage gaps” that appear to be based on gender…or any other protected class, and if they exist seek legal counsel to determine if liability exists.