California first enacted an equal pay statute in 1949. Existing law prohibited a California employer from paying women a lesser wage than the men at the same location if the two performed the same work, unless the wage differential could be justified by seniority, merit, or a system that qualitatively measured an employee’s quantity or quality of production. The existing law, however, was almost impossible to enforce because most California employees couldn't prove that an actual wage discrepancy existed.

Effective January 1, 2016, the new California Fair Pay Act (SB 358) set forth in Labor Code §1197.5, provides for wage transparency and a true means by which an employee can bring and win a wage discrimination lawsuit. The stated goal of the new legislation is to eliminate pay disparities based on gender by reducing the employee’s burden of proving a wage disparity and increasing an employers’ burden of proving there is a basis for the wage discrepancy.

To increase transparency, the California Fair Pay Act prohibits California employers from restricting their California employees from inquiring about, discussing, or disclosing their wages with and to their co-workers for the purpose of ascertaining whether there is a basis for bringing a claim for wage discrimination. As of January 1, 2016, all California employees are free to openly discuss their wages with their co-workers even if their employment agreement states otherwise.

The California Fair Pay Act also requires the employer to prove that a discrepancy in wages between male and female employees performing substantially the same work is reasonably and entirely based on specified objective factors such as: seniority, merit, or a system that qualitatively measures an employee’s quantity or quality of production.

The California Fair Pay Act also prohibits California employers from terminating, or in any other manner retaliating against, an employee who inquired about, discussed, or disclosed their wages. In the event an employee brings a successful lawsuit, the employee may receive reinstatement and damages (the amount of wages the employee was not paid due to the wage differential plus interest, reimbursement for lost wages and benefits if the employee was terminated, and statutory damages of an additional equal amount).

Finally, the bill increases the California’s employer’s duty to maintain records from 2 years to 3 years.

If you are an employer, you should immediately examine your pay rates for the same or similar jobs to see if disparities exist based on gender. If disparities exist, check to see whether they can be justified by objective factors set forth in the new law. If note, remedy the situation immediately.