MIND THE GAP UPDATE: AB 1676 AND SB 1063 GREATLY EXPANDS PROTECTIONS UNDER THE FAIR PAY ACT

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06/27/2017

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MIND THE GAP UPDATE: AB 1676 AND SB 1063 GREATLY EXPANDS PROTECTIONS UNDER THE FAIR PAY ACT

 By: Anthony Oceguera

The Saqui Law Group previously discussed significant changes to the California Fair Pay Act (i.e., Labor Code section 1197.5) made by Senate Bill 358, which was passed into law last year.  That E-Blast can be found hereAs a refresher, Senate Bill 358 put the burden on the employer who is sued to show that any pay difference between men and women performing substantially similar work was based on: 1) A seniority system; 2) A merit system; 3) A system measuring earnings by quantity or quality of production; or 4) By some other factor that is not based on sex but is related to the position in question and is a business necessity.

Emboldened by its success, the California legislature passed two additional bills this year – Assembly Bill 1676 and Senate Bill 1063 – that further expand the reach and impact of the California Fair Pay Act. 

Assembly Bill 1676 expressly prohibits employers from considering prior salary as the sole justification for any disparity in compensation.  Before it was amended, this bill also would have prohibited employers from seeking an applicant’s salary history.  However, California will not go as far as some states, such as Massachusetts, which recently prohibited employers from requesting compensation history prior to making an offer and will, instead, allow employers to continue to request prior salary information.

Whereas Assembly Bill 1676 represents a further fine tuning of the Fair Pay Act, Senate Bill 1063 triggers far more dramatic changes to the Fair Pay Act, expanding its protection to race and ethnicity.  As a result, any pay disparity between employees of different races and ethnicities performing substantially similar work will have to be shown by an employer who is sued to be based on 1) A seniority system; 2) A merit system; 3) A system measuring earnings by quantity or quality of production; or 4) By some other factor that is not based on race or ethnicity but is related to the position in question and is a business necessity.  In other words, the same limitations which were applied to difference in pay between men and women now apply to differences in pay between various races and ethnicities.

COUNSEL TO MANAGEMENT:

California continues to enact laws targeting every conceivable aspect of employment, with an apparent aim to make all employers pay in the same lockstep manner the state pays its own employees.  As a result, employers are cautioned to carefully review their hiring practices, and make sure that any disparities in pay between men and women or employees of different races or ethnicities doing “substantially similar work” can be justified by one or more of the four acceptable factors discussed above.  The new laws go into effect on January 1, 2017.  If you have questions about the changes in the law or would like assistance reviewing your own policies to ensure that they adhere with these changes, call the experts at The Saqui Law Group.     
 

 

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