The California Fair Pay Act (“CFPA”) requires equal pay for men and women doing substantially similar work. As of January 1, 2017, Senate Bill 1063 and Assembly Bill 1676 amended the CFPA and expanded its scope.
SB 1063 requires equal pay for employees of different races and/or ethnicities doing substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions. An employer may justify the difference in pay if such is based on one or more of the following factors, applied reasonably, and the factors relied upon account for the entire differential:
(1) A seniority system.
(2) A merit system.
(3) A system that measures earnings by quantity or quality of production.
(4) A bona fide factor other than race or ethnicity, such as education, training, or experience, but that is job related and consistent with a business necessity.
AB 1676 prohibits employers from relying solely on an employee’s salary history as a “bona fide factor” for a difference in pay. An employer may still inquire about an applicant’s salary history, but such may not be the sole justification for any wage differential based on gender, race, or ethnicity.
Employers should maintain records of their employees’ wage rates, job classifications, and other terms and conditions of employment for at least three years, and should review their wage practices to ensure compliance with the CFPA.