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California’s Fair Pay Act Forces Employers to Assess Worker Paychecks

Now is an excellent time for employers to assess their compensation policies. That’s because the New Year activated California’s Fair Pay Act. Analysts say it’s one of the country’s toughest equal pay laws, and the consequences are serious for companies that are found to be in violation.

Fair%20Pay%2070618813-001.jpgThe new legislation was signed in October 2015 by Governor Jerry Brown. It’s essentially an amendment to the state’s existing fair pay laws, which have been in place for several decades. Federal laws also ensure equal pay for workers regardless of gender or other characteristics. However, this new legislation puts more of the onus on employers to ensure that they are fairly paying employees.

Democratic state senator Hannah-Beth Jackson introduced the bill earlier in 2015 in the wake of actress Patricia Arquette’s Oscar acceptance speech that called for an end to the gender pay gap. A key component of the new law is the requirement for employers to be able to prove that they are paying employees of both sexes the same compensation for “substantially similar work.” The law asks employers to look beyond titles, assessing actual duties performed and responsibilities assumed, when settling questions of pay. If disparities exist between the compensation for male and female workers who perform substantially similar work, then the employer must be able to articulate a non-gender based reason why the disparity exists.

Employers can use distinctions like seniority and merit to justify offering higher compensation to men when compared to women in a similar role. It is advisable for employers to assess and document such decisions in case questions or disputes arise at a later date. Similarly, the new law is forcing many employers to dig deep into company archives to assess the current salaries of employees and decide whether or not such disparities already exist.

While a full-scale, company-wide audit of employee compensation is neither easy nor inexpensive, it is far preferable to being made the subject of a class-action lawsuit. Employers may want to contact employment law attorneys to learn more about how to protect themselves in light of the new fair pay law.