Governor To Sign SB 358 - California Fair Pay Act

SB 358, titled the California Fair Pay Act (CFPA), was introduced by Senator Hannah-Beth Jackson (D-Santa Barbara) on February 25, 2015. The bill strengthens an existing law that prohibits paying women less than men for performing the same job. The Los Angeles Times called the CFPA “the nation’s most aggressive attempt yet to close the salary gap between men and women.”

The bill was amended several times as it went through the Legislature. After some amendments to address the concerns of employers, even the California Chamber of Commerce dropped its opposition to the bill. On August 31, 2015, SB 358 passed the California Senate unanimously, a rare feat for a piece of employment legislation. Governor Brown has already signaled through his top aide that he intends to sign the CFPA.

So what does the CFPA require and what is its impact on public agencies?

Are Public Agencies Covered by the CFPA? Yes. Interestingly, the on-line version of the Legislative Counsel’s digest states that SB 358 is, “An act to amend Section 1197.5 of the Labor Code, relating to private employment.” However, the language of the act refers to “employers” with no exception for public agencies. Moreover, the act merely amends Labor Code 1197.5, which has been in existence since 1949. Several court decisions have been issued under Labor Code 1197.5 against public agencies. So unless I’m missing something, CFPA applies to public agencies.

What are the New Requirements of the CFPA? As mentioned above, Labor Code 1197.5 has been in existence since 1949 and generally prohibits paying someone of one sex less than someone of the opposite sex for the same job. SB 358 closes what Senator Jackson called “loopholes” in the law. Specifically, SB 358 does the following:

Requires equal pay for “substantially similar work, when viewed as a composite of skill, effort, and responsibility.” The old law required equal pay for the same job. Under SB 358, the comparator can now to be a job that is substantially similar. So, for example, a female housekeeper could assert that she should earn as much as a male janitor because the two jobs are substantially similar;
Still allows differences in pay based on things like a seniority system or merit system or other bona fide factor. However, SB 358 requires that the bona fide factor be consistent with business necessity. Moreover, SB 358 requires that the employer demonstrate that bona fide factors account for the entire wage differential;
Increases the record keeping requirement from 2 years to 3 years;
Prohibits retaliation against employees for invoking this law;
Designates as protected conduct an employee’s disclosure of her wages, discussing the wages of others, and inquiring about other employee’s wages.

Comments:

The impact of the CFPA on public agencies should be fairly limited. As mentioned, Labor Code section 1197.5 has been in existence since 1949. The difficulty for employees trying to utilize the law is that it’s very difficult to prove a violation since employers often will have a justification for any wage differential. While this law puts some of the burden on the employer, I don’t see this law by itself creating a groundswell of new litigation.
SB 358 also strives to promote transparency in the workplace for employee salaries. This may have a big impact on the private sector but should have fairly limited impact in the public sector because public sector salaries are largely already public.
In my humble opinion, the public sector has always been a leader in trying to narrow the wage gap and hopefully that will continue. SB 358 will further aid that admirable goal but I don’t see public agencies having to make big changes as a result of this new law.