California Equal Pay Law Changes Have Big Implications

Author: David B. Weisenfeld, XpertHR Legal Editor

October 16, 2015

California Governor Jerry Brown has signed a flurry of bills into law, but the most notable includes significant changes to the state's equal pay statute. California law and federal law already required equal pay to employees of the opposite sex for equal work. But this new measure goes much further, leading Governor Brown to call it, "The strongest equal pay law in the nation."

Effective January 1, 2016, SB 358 will mandate that male and female employees who perform substantially similar work receive equal pay, even if they have different job titles or if they work in different offices for the same employer. The new law also greatly increases the burden of proof for an employer in defending against an equal pay lawsuit. For instance, once a pay differential has been shown, it is now the employer's burden to establish that the differential exists entirely for nondiscriminatory reasons.

In addition, the law adds a private right of action with a one-year statute of limitations for employees who believe they have been discriminated or retaliated against for exercising their rights under the statute.

"This is absolutely going to result in a lot more litigation," says Littler shareholder Chris Cobey of the firm's San Jose office. "They really moved in the ballpark fences for bringing this type of claim."

Co-Workers Can Discuss Their Pay

What most jumps out at Cobey about the law is a provision that allows an employee to ask about or freely discuss a co-worker's pay without fear of retaliation from their employer. The law does provide that no one - including the employer - is obligated to disclose this information. But he suggests that in this social media age, such discussions can and will occur.

"Someone is going to go on Facebook and ask people to e-mail their salary information," says Cobey. "Can an employer stop that? I think it's unlikely." The Littler attorney explains that such a post will be seen as a protected discussion involving the terms and conditions of employment.

The bill's author, State Senator Hannah-Beth Jackson, cited studies finding that, in 2014, California women earned 84 cents to every dollar their male counterparts earned. She says this law will address that persistent wage gap.

New Wage Theft Law

Also effective January 1, 2016, a new California wage theft law will allow the state labor commissioner to file a lien on an employer's property to assist in collecting unpaid wages.

A December 2014 Department of Labor report found that more than 300,000 minimum wage violations occur in California each week. This law aims at combating those violations. "It gives the California labor commissioner all of the tools of a judgment creditor," says Cobey.

Mandatory Arbitration Remains in Play

While Governor Brown made news by signing these laws, equally significant was his veto of a potentially groundbreaking measure involving the use of mandatory arbitration agreements as a condition of employment. On October 11, Brown vetoed AB 465, which would have outlawed the use of these agreements by employers. Had he signed the legislation, it would have made California the only state in the nation to have this particular prohibition.

"While I am concerned about ensuring fairness in employment disputes, I am not prepared to take this far-reaching step" Brown wrote in his veto message. He also noted that the US Supreme Court and other states have consistently struck down blanket bans on mandatory arbitration agreements as violating the Federal Arbitration Act.

Cobey calls the veto "good news for employers" and says it is the biggest news of the year in California affecting the workplace. He notes that the California Chamber of Commerce had called the bill "a job killer."