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Thursday, October 8, 2015

Governor Brown Signs Legislation Amending Fair Pay Act

On October 6, Governor Brown signed legislation amending the State's Fair Pay Act. Cal. Labor Code section 1197.5. Broadly speaking, the Fair Pay Act prohibits employers from paying their employees less than employees of the other sex for equal work in the same establishment and under similar working conditions, "except where the payment is made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex."

The amended law changes some of these terms and provides protections for employees who complain of violations. It provides:
(a) An employer shall not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates: 
(1) The wage differential is based upon one or more of the following factors: 
(A) A seniority system. 
(B) A merit system. 
(C) A system that measures earnings by quantity or quality of production. 
(D) A bona fide factor other than sex, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. For purposes of this subparagraph, “business necessity” means an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential. 
(2) Each factor relied upon is applied reasonably. 
(3) The one or more factors relied upon account for the entire wage differential.
The new law makes the following changes as well:

Employers must keep records of wages and other terms and conditions of employment for three years, rather than two;

Employers may not: (1) discriminate or retaliate against employees who take action to enforce the law; (2) prohibit employees from discussing their wages or the wages of others, or aiding or encouraging other employees from enforcing their rights under the law;

Employees discriminated or retaliated against may sue for reinstatement, lost wages and benefits, and equitable relief;

A civil action has a statute of limitations of "one year after the cause of action occurs."

Additional information, including the text of the bill and a red-lined version of section 1197.5, is available here.

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