Until recently, California’s equal pay law required that men and women working at the same location receive equal pay for equal work, California Labor Code Section 1197.5.  But this law was substantially revised on October 6, 2015, and now California has the strictest equal pay law in the country!  Effective January 1, 2016, a female employee will be able to sue her employer if she can identify male co-workers who are being paid more for doing “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.”  These revisions will make it much easier for an employee to compare herself to other male employees working at other company locations and doing a similar but not necessarily the same job.

For example, let’s assume that a business owns several hotels in California, and has employed a female room cleaner who thinks she is not being fairly paid.  Before California’s equal pay law was changed, the room cleaner could only compare her pay to other male room cleaners working at the same hotel.  Under the revised equal pay law, the female room cleaner could argue that her pay should be compared with the pay of male room cleaners and male janitors working at all of the company’s locations.

So what can you do as a business owner to avoid liability under California’s revised equal pay law?

  1. Conduct an attorney-client privileged analysis of the pay of your male and female employees. An employer can determine the extent to which there may be potential liability under the revised equal pay law without creating a document which could be discoverable if the employer is later sued.  Based on this analysis, legal counsel can help employers take proactive measures to significantly reduce potential liability before the revised law goes into effect.
  1. Develop guidelines and train your human resources staff in improving how pay is determined for all employees based on legal distinctions such as skill, education, seniority, experience, merit, quality or quantity of production, and other non-gender related, valid pay differentials.
  1. Make sure all of your relevant policies are in compliance with the revised equal pay law. For example, it is extremely important that companies do not prohibit or discourage employees from discussing their compensation with each other.

So be smart and proactive!  For further information on California’s revised equity pay law, contact Valerie Menager at vmenager@carr-mcclellan.com or 650-342-9600.