New California Law: Easier Burden for Employees in Proving Gender Based Pay Claims

On October 6, 2015 Governor Jerry Brown signed Senate Bill 358. This law substantially eases the burden of California employees in proving gender-based pay claims. This law also increases the number of years that employers must retain employee records. Senate Bill 358 goes into effect on January 1, 2016.

California has been prohibiting gender-based pay disparities, including California Labor Code § 1197.5 which prevents employers from paying an employee “at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility…” To prove a claim under § 1197.5, an employee had to prove that a member of the opposite sex working in the same establishment earned more for equal work on jobs that require equal skill, effort, and responsibility; an employer could defend this practice by showing the pay difference was based on a factor unrelated to gender such as seniority.

The California Legislature determined that this “statutory language makes it difficult to establish a successful” equal pay claim. As a result, it passed Senate Bill 358 to improve the state’s equal pay provisions. The California Legislature amended § 1197.5 by increasing the number of years that an employer has to retain employee records, and also creating additional protections for employees who wish to disclose or discuss their wages.

The new law also increases the burden on an employer to explain the pay differential between employees. Previously, an employer only needed to prove that the pay difference was based on “a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or…any bona fide factor other than sex.” An employer can still defend pay differentials through these reasons.

However, an employer can only avoid liability by establishing that each factor relied upon is applied reasonably and that one or more factors relied upon account for the entire wage differential.

To defend the wage differential through some other “bona fide factor other than sex,” an employer must also demonstrate that “the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the business in question, and is consistent with a business necessity.”

Senate Bill 358 allows employees to pursue an equal pay claim by submitting an administrative complaint with California’s Division of Labor Standards Enforcement or filing a civil lawsuit. An employer also cannot retaliate against an employee for exercising his or her rights under this law.

An employee who successfully proves an equal pay claim may recover backpay, a liquidated damages award equal to the backpay recovery, interest, and any costs and attorneys’ fees incurred in pursuing the action.

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