Hunton Employment & Labor Perspectives

When it comes to employee wage equality, California already has one of the most expansive laws in the country, and it is now attempting to go even further. On June 23, the Wage Equality Act of 2016 (“Wage Equality Act”), SB 1063, took one step closer to becoming law as it passed the California State Assembly’s Committee on Labor and Employment. The bill seeks to extend the protections of the California Fair Pay Act, which prohibits pay disparity based on sex for substantially similar work, to also prohibit such disparities based on race or ethnicity. Already approved by the State Senate on May 31, 2016, the Wage Equality Act will now be heard in the Assembly’s Appropriations Committee in August after which, assuming it passes, it will make its way to the Assembly floor. If California’s Wage Equality Act is enacted, it will likely create the strongest wage equality law in the United States.

The California Fair Pay Act was signed into law on October 6, 2015 and took effect on January 1, 2016. Under that law, employers are prohibited from paying employees of different sexes disparately for work that is substantially similar and performed under similar work conditions when viewed with respect to skill, effort, and responsibility. Employers who violate the provision are liable not only for the amount of the actual wage damages plus interest, but also liquidated damages in an equal amount, and potentially costs and attorney’s fees. Moreover, employers are prohibited from discharging, discriminating, or retaliating against an employee for taking action to invoke or assist with enforcement of the Act’s provisions and from prohibiting employees from disclosing their wages, discussing or inquiring about another employee’s wages, or assisting another employee to exercise the employee’s rights under the law. Employees who are discharged, discriminated, or retaliated against for engaging in conduct permitted by the Fair Pay Act may bring a civil action for reinstatement, reimbursement, and appropriate equitable relief. Moreover, a willful violation of the law constitutes a misdemeanor punishable by a fine, jail time, or both.

The Wage Equality Act seeks to expand the Fair Pay Act’s prohibitions on wage disparities so that it applies not only to differences in pay based on sex but also based on race and ethnicity. Under the new subpart, like with sex, disparities in pay for employees of a different race or ethnicity engaging in substantially similar work under similar working conditions are prohibited unless the wage gap is based on one or more of the following factors:

• A seniority system;
• A merit system;
• A system that measures earnings by quantity or quality of production;
• A “bona fide” reason (education, training, experience, etc.) other than race or ethnicity.

Because California’s Fair Pay Act was only recently enacted, some have opposed passage of the Wage Equality Act, claiming that the legislature should allow time for all parties to understand the Fair Pay Act and its boundaries before enacting an additional law. While it is too early to tell what will happen with the Wage Equality Act, it is important to note that regardless of whether it is approved at this juncture, it will not be the last attempt to amend California’s equal pay law. Even in supporting the Wage Equality Act, Senator Isadore Hall, III, its author, made reference to expanding the statute further, stating that “[i]deally, other protected classes, such as members of the LGBTQ or disabled community” would also be included. It therefore remains important for California employers to ensure wage records, job classifications, job descriptions and other documents that outline the terms and conditions of employees’ employment are properly maintained for all employees pursuant to the law and to be conscious of disparities in the wages of employees who perform similar work to ensure such differences are understood.