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

As co-leader of the firm’s ESG group, Laura Mitchell partners with her clients to evaluate, set, achieve and monitor their organizational culture and human capital goals. She focuses her practice on data analytics, including pay equity and other employee analytics, working side-by-side with…

As co-leader of the firm’s ESG group, Laura Mitchell partners with her clients to evaluate, set, achieve and monitor their organizational culture and human capital goals. She focuses her practice on data analytics, including pay equity and other employee analytics, working side-by-side with employers to build programs that benefit employees and create a stable, high-functioning workplace. Understanding that an inclusive, values-based culture provides a crucial competitive advantage in the modern workplace, Laura enjoys counseling companies on the development of proactive and equitable pay and diversity practices.

In Laura’s version of the reimagined workplace, attention to human capital issues, especially DEI and pay equity, would be the rule rather than the exception nationwide and she works with companies across all industries—both new and well-established multi-national organizations of all sizes—to realize this vision for her clients’ ongoing success. She helps clients understand all issues across the spectrum of their journey, helping to establish regular analyses as well as counseling organizations on implementation and compliance obligations, where applicable. Committed to putting her clients’ organizational goals first and foremost, Laura views herself as an extension of her clients’ team, responsible for providing proactive guidance and engaging in transparent, ongoing communication.

Laura also represents companies in OFCCP matters, preparing for and defending OFCCP audits, and counseling employers on issues stemming from OFCCP regulations. She personally oversees the development of hundreds of Affirmative Action Plans for clients each year and is intimately involved in the defense of OFCCP audits. Her approach to compliance is one of facilitation and conciliation while simultaneously advocating in the best interests of her clients.