As the latest example of the heightened focus on addressing pay discrimination, on October 6, 2015, California Governor Jerry Brown signed what many are calling the toughest equal pay law in the country – the California Fair Pay Act, an initiative designed to close the gender wage gap in the state.

At the heart of the Act is a requirement for employers to demonstrate any gender “wage differentials” are the result of legitimate considerations, and not because of sex discrimination.   And the reason why the Act is being heralded as one of the toughest in the country is because it establishes that employees of the opposite sex must be paid for “substantially similar work” rather than an “equal work” requirement.  Additionally, the Act provides only four options for legitimate explanations for the differences in pay:

(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 these reasons, its imperative California employers, undertake special care to perform a privileged, proactive pay analyses designed uncover any unexplained differences in pay.  This proactive tool, if performed correctly, will enable employers to learn “what they don’t know” about their pay systems and resulting employee compensation and address any issues before they become problematic.

In addition to these stringent non discrimination standards, the Act takes a page from the recently finalized federal Pay Transparency regulations and prohibits retaliation against employees who discuss or disclose information about compensation.

Stay tuned for more information and insights on the implementation and implications of this new law.

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Photo of Laura A. Mitchell Laura A. Mitchell

Laura A. Mitchell is a Principal in the Denver, Colorado, office of Jackson Lewis P.C. She is a member of the firm’s Affirmative Action and OFCCP Defense practice group as well as the firm’s Pay Equity Resource Group. She is also on the…

Laura A. Mitchell is a Principal in the Denver, Colorado, office of Jackson Lewis P.C. She is a member of the firm’s Affirmative Action and OFCCP Defense practice group as well as the firm’s Pay Equity Resource Group. She is also on the leadership team for the firm’s Government Contractor Industry Group.

Her practice is focused on representing government and non-government contractors in OFCCP matters, preparing for and defending OFCCP audits, and counseling employers on issues stemming from OFCCP regulations. Ms. Mitchell personally oversees the development of hundreds of AAPs each year and is intimately involved in the defense of numerous OFCCP audits. She also spends significant time counseling companies in connection with conducting pay equity analyses as well as government contractor employment obligations.

Ms. Mitchell is the editor and a principal contributor of The Affirmative Action Law Advisor blog and frequently presents on pay equity, affirmative action compliance, OFCCP enforcement trends, and government contractor obligations.

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