BILL NUMBER: AB 1676 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 19, 2016
AMENDED IN SENATE JUNE 15, 2016
AMENDED IN ASSEMBLY MAY 31, 2016
INTRODUCED BY Assembly Members Campos and Gonzalez
(Principal coauthor: Senator Jackson)
(Coauthors: Assembly Members Bonilla, Chiu, Cristina Garcia, and
Eduardo Garcia)
(Coauthor: Senator Liu)
JANUARY 19, 2016
An act to amend Section 1197.5 of the Labor Code, relating to
employers.
LEGISLATIVE COUNSEL'S DIGEST
AB 1676, as amended, Campos. Employers: wage discrimination.
Existing law generally prohibits an employer from paying an
employee at wage rates less than the rates paid to employees of the
opposite sex in the same establishment for equal work on jobs the
performance of which requires equal skill, effort, and
responsibility, and which are performed under similar working
conditions. Existing law establishes exceptions to that prohibition,
including, among others, where the payment is made based on any bona
fide factor other than sex, such as education, training, or
experience. Existing law makes it a misdemeanor for an employer or
other person acting either individually or as an officer, agent, or
employee of another person to pay or cause to be paid to any employee
a wage less than the rate paid to an employee of the opposite sex as
required by these provisions, or who reduces the wages of any
employee in order to comply with these provisions. Existing law also
makes it a misdemeanor for an employer to refuse or neglect to comply
with the above provisions of law.
This bill would specify that prior salary cannot, by itself,
justify any disparity in compensation under the bona fide factor
exception to the above prohibition. By changing the definition of an
existing crime, this bill would impose a state-mandated local
program.
This bill would incorporate additional changes in Section 1197.5
of the Labor Code proposed by SB 1063 that would become operative
only if SB 1063 and this bill are both chaptered and become effective
on or before January 1, 2017, and this bill is chaptered last.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Over the past decade, the wage gap has barely budged and wage
disparities continue to persist. In 2015, the gender wage gap in
California stood at 16 cents on the dollar. For women of color, wage
inequality is much worse. African American women in California make
just 63 cents and Hispanic women less than 43 cents for every dollar
white non-Hispanic men make.
(b) The problematic practices of seeking salary history from job
applicants and relying on prior salary to set employees' pay rates
contribute to the gender wage gap by perpetuating wage inequalities
across the occupational spectrum. Women are paid less than men in
99.6 percent of occupations and are more likely to face financial
penalties for taking time out of the paid workforce due to
childbearing and family caregiving responsibilities.
(c) When employers make salary decisions during the hiring process
based on prospective employees' prior salaries or require women to
disclose their prior salaries during salary negotiations, women often
end up at a sharp disadvantage and historical patterns of gender
bias and discrimination repeat themselves, causing women to continue
earning less than their male counterparts.
(d) Government officials have recognized the discriminatory impact
that prior salaries can have on women in the job market. In 2015, on
Equal Pay Day, the chair Chair of the
Equal Employment Opportunity Commission (EEOC) advised employers on
important steps they could take to ensure equal pay for equal work,
including eliminating "discriminatory pay gaps on the basis of prior
salary" and the 2005 EEOC Compliance Manual states that " p]rior
salary cannot, by itself, justify a compensation disparity."
(e) In July of 2015, the acting director of the federal Office of
Personnel Management provided guidance on advancing pay equality in
the federal government, warning that reliance on salary history
"could potentially adversely affect a candidate who is returning to
the workplace after having taken extended time off from his or her
career or for whom an existing rate of pay is not reflective of the
candidate's current qualifications or existing labor market
conditions."
(f) Courts also have warned against relying on salary history and
have stated that prior salary cannot, by itself, justify a wage
disparity. In Corning Glass Works v. Brennan, (1974) 417 U.S. 188,
the United States Supreme Court held that a pay differential which
"arises] simply because men would not work at the low rates paid
women ... and reflects] a job market in which the employer] could pay
women less than men for the same work" is not based on a cognizable
factor other than sex under the Equal Pay Act (Public Law 88-38)
(Id., at p. 205). More recently, in Rizo v. Yovino, Fresno
County Superintendent of Schools, United States District Court,
Eastern District of California, Case No. 1:14-cv-0423-MJS, the
district court denied summary judgment on defendant's motion under
the federal Equal Pay Act based on its finding that, "a pay structure
based exclusively on prior wages is so inherently fraught with the
risk -- indeed, here, the virtual certainty -- that it will
perpetuate a discriminatory wage disparity between men and women that
it cannot stand, even if motivated by a legitimate
non-discriminatory business purpose."(Id., at p. 16). The
court went on to explain that,"saying] an otherwise unjustified pay
differential between women and men performing equal work is based on
a factor other than sex because it reflects historical market forces
which value the equal work of one sex over the other perpetuates the
market's sex-based subjective assumptions and stereotyped
misconceptions Congress passed the Equal Pay Act to eradicate." (Id.,
at p. 17).
(g) This act will codify existing law with respect to the
provision stating that prior salary cannot, by itself, justify a wage
differential under Section 1197.5 of the Labor Code.
(h) This act will also help ensure that both employers and workers
are able to negotiate and set salaries based on the requirements,
expectations, and qualifications of the person and the job in
question, rather than on an individual's prior earnings, which may
reflect widespread, longstanding, gender-based wage disparities in
the labor market.
SEC. 2. Section 1197.5 of the Labor Code is amended to read:
1197.5. (a) An employer shall not pay any of its employees at
wage rates less than the rates paid to employees of the opposite sex
for substantially similar work, when viewed as a composite of skill,
effort, and responsibility, and performed under similar working
conditions, except where the employer demonstrates:
(1) The wage differential is based upon one or more of the
following factors:
(A) A seniority system.
(B) A merit system.
(C) A system that measures earnings by quantity or quality of
production.
(D) A bona fide factor other than sex, such as education,
training, or experience. This factor shall apply only if the employer
demonstrates that the factor is not based on or derived from a
sex-based differential in compensation, is job related with respect
to the position in question, and is consistent with a business
necessity. For purposes of this subparagraph, "business necessity"
means an overriding legitimate business purpose such that the factor
relied upon effectively fulfills the business purpose it is supposed
to serve. This defense shall not apply if the employee demonstrates
that an alternative business practice exists that would serve the
same business purpose without producing the wage differential.
(2) Each factor relied upon is applied reasonably.
(3) The one or more factors relied upon account for the entire
wage differential. Prior salary shall not, by itself, justify any
disparity in compensation.
(b) Any employer who violates subdivision (a) is liable to the
employee affected in the amount of the wages, and interest thereon,
of which the employee is deprived by reason of the violation, and an
additional equal amount as liquidated damages.
(c) The Division of Labor Standards Enforcement shall administer
and enforce this section. If the division finds that an employer has
violated this section, it may supervise the payment of wages and
interest found to be due and unpaid to employees under subdivision
(a). Acceptance of payment in full made by an employer and approved
by the division shall constitute a waiver on the part of the employee
of the employee's cause of action under subdivision (g).
(d) Every employer shall maintain records of the wages and wage
rates, job classifications, and other terms and conditions of
employment of the persons employed by the employer. All of the
records shall be kept on file for a period of three years.
(e) Any employee may file a complaint with the division that the
wages paid are less than the wages to which the employee is entitled
under subdivision (a) or that the employer is in violation of
subdivision (j). The complaint shall be investigated as provided in
subdivision (b) of Section 98.7. The division shall keep confidential
the name of any employee who submits to the division a complaint
regarding an alleged violation of subdivision (a) or (j) until the
division establishes the validity of the complaint, unless the
division must abridge confidentiality to investigate the complaint.
The name of the complaining employee shall remain confidential if the
complaint is withdrawn before the confidentiality is abridged by the
division. The division shall take all proceedings necessary to
enforce the payment of any sums found to be due and unpaid to these
employees.
(f) The department or division may commence and prosecute, unless
otherwise requested by the employee or affected group of employees, a
civil action on behalf of the employee and on behalf of a similarly
affected group of employees to recover unpaid wages and liquidated
damages under subdivision (a), and in addition shall be entitled to
recover costs of suit. The consent of any employee to the bringing of
any action shall constitute a waiver on the part of the employee of
the employee's cause of action under subdivision (g) unless the
action is dismissed without prejudice by the department or the
division, except that the employee may intervene in the suit or may
initiate independent action if the suit has not been determined
within 180 days from the date of the filing of the complaint.
(g) Any employee receiving less than the wage to which the
employee is entitled under this section may recover in a civil action
the balance of the wages, including interest thereon, and an equal
amount as liquidated damages, together with the costs of the suit and
reasonable attorney's fees, notwithstanding any agreement to work
for a lesser wage.
(h) A civil action to recover wages under subdivision (a) may be
commenced no later than two years after the cause of action occurs,
except that a cause of action arising out of a willful violation may
be commenced no later than three years after the cause of action
occurs.
(i) If an employee recovers amounts due the employee under
subdivision (b), and also files a complaint or brings an action under
subdivision (d) of Section 206 of Title 29 of the United States Code
which results in an additional recovery under federal law for the
same violation, the employee shall return to the employer the amounts
recovered under subdivision (b), or the amounts recovered under
federal law, whichever is less.
(j) (1) An employer shall not discharge, or in any manner
discriminate or retaliate against, any employee by reason of any
action taken by the employee to invoke or assist in any manner the
enforcement of this section. An employer shall not prohibit an
employee from disclosing the employee's own wages, discussing the
wages of others, inquiring about another employee's wages, or aiding
or encouraging any other employee to exercise his or her rights under
this section. Nothing in this section creates an obligation to
disclose wages.
(2) Any employee who has been discharged, discriminated or
retaliated against, in the terms and conditions of his or her
employment because the employee engaged in any conduct delineated in
this section may recover in a civil action reinstatement and
reimbursement for lost wages and work benefits caused by the acts of
the employer, including interest thereon, as well as appropriate
equitable relief.
(3) A civil action brought under this subdivision may be commenced
no later than one year after the cause of action occurs.
SEC. 2.5. Section 1197.5 of the Labor
Code is amended to read:
1197.5. (a) An employer shall not pay any of its employees at
wage rates less than the rates paid to employees of the opposite sex
for substantially similar work, when viewed as a composite of skill,
effort, and responsibility, and performed under similar working
conditions, except where the employer demonstrates:
(1) The wage differential is based upon one or more of the
following factors:
(A) A seniority system.
(B) A merit system.
(C) A system that measures earnings by quantity or quality of
production.
(D) A bona fide factor other than sex, such as education,
training, or experience. This factor shall apply only if the employer
demonstrates that the factor is not based on or derived from a
sex-based differential in compensation, is job related with respect
to the position in question, and is consistent with a business
necessity. For purposes of this subparagraph, "business necessity"
means an overriding legitimate business purpose such that the factor
relied upon effectively fulfills the business purpose it is supposed
to serve. This defense shall not apply if the employee demonstrates
that an alternative business practice exists that would serve the
same business purpose without producing the wage differential.
(2) Each factor relied upon is applied reasonably.
(3) The one or more factors relied upon account for the entire
wage differential. Prior salary shall not, by itself, justify
any disparity in compensation.
(b) An employer shall not pay any of its employees at wage rates
less than the rates paid to employees of another race or ethnicity
for substantially similar work, when viewed as a composite of skill,
effort, and responsibility, and performed under similar working
conditions, except where the employer demonstrates:
(1) The wage differential is based upon one or more of the
following factors:
(A) A seniority system.
(B) A merit system.
(C) A system that measures earnings by quantity or quality of
production.
(D) A bona fide factor other than race or ethnicity, such as
education, training, or experience. This factor shall apply only if
the employer demonstrates that the factor is not based on or derived
from a race- or ethnicity-based differential in compensation, is job
related with respect to the position in question, and is consistent
with a business necessity. For purposes of this subparagraph,
"business necessity" means an overriding legitimate business purpose
such that the factor relied upon effectively fulfills the business
purpose it is supposed to serve. This defense shall not apply if the
employee demonstrates that an alternative business practice exists
that would serve the same business purpose without producing the wage
differential.
(2) Each factor relied upon is applied reasonably.
(3) The one or more factors relied upon account for the entire
wage differential. Prior salary shall not, by itself, justify any
disparity in compensation.
(b)
(c) Any employer who violates subdivision (a) or
(b) is liable to the employee affected in the amount of the
wages, and interest thereon, of which the employee is deprived by
reason of the violation, and an additional equal amount as liquidated
damages.
(c)
(d) The Division of Labor Standards Enforcement shall
administer and enforce this section. If the division finds that an
employer has violated this section, it may supervise the payment of
wages and interest found to be due and unpaid to employees under
subdivision (a). (a) or (b). Acceptance
of payment in full made by an employer and approved by the division
shall constitute a waiver on the part of the employee of the employee'
s cause of action under subdivision (g). (h).
(d)
(e) Every employer shall maintain records of the wages
and wage rates, job classifications, and other terms and conditions
of employment of the persons employed by the employer. All of the
records shall be kept on file for a period of three years.
(e)
(f) Any employee may file a complaint with the division
that the wages paid are less than the wages to which the employee is
entitled under subdivision (a) or (b) or that the
employer is in violation of subdivision (j).
(k). The complaint shall be investigated as provided in
subdivision (b) of Section 98.7. The division shall keep confidential
the name of any employee who submits to the division a complaint
regarding an alleged violation of subdivision (a) or (j)
(a), (b), or (k) until the division establishes
the validity of the complaint, unless the division must abridge
confidentiality to investigate the complaint. The name of the
complaining employee shall remain confidential if the complaint is
withdrawn before the confidentiality is abridged by the division. The
division shall take all proceedings necessary to enforce the payment
of any sums found to be due and unpaid to these employees.
(f)
(g) The department or division may commence and
prosecute, unless otherwise requested by the employee or affected
group of employees, a civil action on behalf of the employee and on
behalf of a similarly affected group of employees to recover unpaid
wages and liquidated damages under subdivision (a),
(a) or (b), and in addition shall be entitled to
recover costs of suit. The consent of any employee to the bringing
of any action shall constitute a waiver on the part of the employee
of the employee's cause of action under subdivision (g)
(h) unless the action is dismissed without
prejudice by the department or the division, except that the employee
may intervene in the suit or may initiate independent action if the
suit has not been determined within 180 days from the date of the
filing of the complaint.
(g) Any
(h) An employee receiving less
than the wage to which the employee is entitled under this section
may recover in a civil action the balance of the wages, including
interest thereon, and an equal amount as liquidated damages, together
with the costs of the suit and reasonable attorney's fees,
notwithstanding any agreement to work for a lesser wage.
(h)
(i) A civil action to recover wages under subdivision
(a) or (b) may be commenced no later than two years after
the cause of action occurs, except that a cause of action arising out
of a willful violation may be commenced no later than three years
after the cause of action occurs.
(i)
(j) If an employee recovers amounts due the employee
under subdivision (b), (c), and also
files a complaint or brings an action under subdivision (d) of
Section 206 of Title 29 of the United States Code which results in an
additional recovery under federal law for the same violation, the
employee shall return to the employer the amounts recovered under
subdivision (b), (c), or the amounts
recovered under federal law, whichever is less.
(j)
(k) (1) An employer shall not discharge, or in any
manner discriminate or retaliate against, any employee by reason of
any action taken by the employee to invoke or assist in any manner
the enforcement of this section. An employer shall not prohibit an
employee from disclosing the employee's own wages, discussing the
wages of others, inquiring about another employee's wages, or aiding
or encouraging any other employee to exercise his or her rights under
this section. Nothing in this section creates an obligation to
disclose wages.
(2) Any employee who has been discharged, discriminated or
retaliated against, in the terms and conditions of his or her
employment because the employee engaged in any conduct delineated in
this section may recover in a civil action reinstatement and
reimbursement for lost wages and work benefits caused by the acts of
the employer, including interest thereon, as well as appropriate
equitable relief.
(3) A civil action brought under this subdivision may be commenced
no later than one year after the cause of action occurs.
SEC. 3. Section 2.5 of this bill incorporates
amendments to Section 1197.5 of the Labor Code proposed by both this
bill and Senate Bill 1063. It shall only become operative if (1) both
bills are enacted and become effective on or before January 1, 2017,
(2) each bill amends Section 1197.5 of the Labor Code, and (3) this
bill is enacted after Senate Bill 1063, in which case Section 2 of
this bill shall not become operative.
SEC. 3. SEC. 4. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.