Mind The Gap: SB 358 And The Shifting Burden Of Gender-Based Wage Gaps

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Mind The Gap:

SB 358 And The Shifting Burden Of Gender-Based Wage Gaps

By: Kevin Cleveland

Last October, Senate Bill 358, also known as the California Fair Pay Act, was passed into law, amending California Labor Code section 1197.5.  This code was originally enacted in 1949 to prohibit gender based discrimination in pay.  The California Fair Pay Act was intended to strengthen the law’s protections by making it easier for an employee who has raised a claim of unequal pay to establish that they are not being paid the same amount as members of the opposite sex for work which requires substantially the same skill, effort, and responsibility under similar working conditions. 

If an employee makes such a showing, an employer must now show that the difference in pay is based on any or all of the following: 1) a seniority system; 2) a merit system; 3) a system which measures earnings by quality or quantity of production, or 4) a “bona fide” factor other than sex, such as education, training, or experience.  An employer must also show that the pay difference is tied to an absolute business necessity and that its reliance upon one, or several, of the four factors was reasonable and accounts entirely for the wage differential.  In other words, an employer can no longer point to one of the factors as a partial explanation for the wage differential.  This is a significant change that substantially increases the burden of proof faced by employers dealing with unequal pay claims.

The changes to Labor Code section 1197.5 also prohibit an employer from preventing employees from the following: disclosing their own wages; discussing the wages of others; inquiring about other employees’ wages; or assisting other employees with asserting their rights under this section of the Labor Code.  However, employers and fellow employees are not obligated to make such disclosures if requested.

Lastly, the amended law also prohibits discriminating or retaliating against employees who exercise their rights under this section of the Labor Code and extends the time that employers must keep records relating to the terms and conditions of the employees’ employment from two to three years.  In total, these are significant changes that make it much easier for pay inequities to come to light, subjecting employers to significant exposure 


The changes to California Labor Code section 1197.5 require that employers immediately change their retention policies regarding records relating to employees’ terms and conditions of employment.  Additionally, employers will need to make sure that their policies and procedures governing how pay rates are set account for the changes in the law, and that any resulting disparities in pay between male and female employees doing “substantially similar work” can be fully justified by one or more of the four factors discussed above. 

Employers should also be aware of the potential for creating wage differentials when providing raises or bonuses to their employees from now on.  Moreover, employers should consider training supervisors about the law’s new prohibition against retaliation and discrimination against employees who ask about others wages during supervisor trainings.  If you have questions about implementing these legal changes or would like assistance reviewing your own policies, call the legal experts at the Saqui Law Group.


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