BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
AB 1676 (Campos and Gonzalez)
Version: June 15, 2016
Hearing Date: June 28, 2016
Fiscal: Yes
Urgency: No
NR
SUBJECT
Employers: wage discrimination
DESCRIPTION
Existing law provides that 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, as specified. This bill would
additionally provide that prior salary cannot, by itself,
justify any disparity in compensation.
BACKGROUND
The California Equal Pay Act (Act) was first established in 1949
and requires that men and women in the same workplace be given
equal pay for equal work. Although the Act requires
gender-neutral pay practices, studies show that women are still
paid less than their male counterparts, resulting in what is
referred to as the "gender wage gap." The term "gender wage
gap" refers to the difference in earnings between male and
female workers.
Each year, the United States Census Bureau and the United States
Bureau of Labor Statistics provide an estimate of the wage gap
using annual earnings based on the Current Population Survey
Annual Social and Economic Supplement data. Although the gender
wage gap has narrowed since the 1960s, after the passage of the
federal Equal Pay Act of 1963 (EPA), female workers nationwide
earned 78 percent of what male workers were paid as of 2013.
(DeNavas-Walt, Carmen, and Proctor, Income, Poverty, and Health
AB 1676 (Campos and Gonzalez)
Page 2 of ?
Insurance Coverage in the United States: 2013 (2014) U.S. Census
Bureau, Current Population Reports (Sept. 2014)
[as of
Apr. 23, 2014) p. 10.) This translates into a wage gap of 22
cents. In 2014, the gender wage gap in California stood at 16
cents on the dollar. (AAUW, The Gender Pay Gap: California
(Sept. 2014) [as of June 21, 2016].)
Recent federal legislation has been attempted to eliminate the
national gender wage gap. The Pay Check Fairness Act (H.R.
377/S. 844, 113th Congress) would have increased penalties for
employers who pay different wages to men and women for "equal
work" and would add programs for training, research, technical
assistance, and pay equity employer recognition awards. Those
bills, among other things, would have provided safeguards to
protect employees from retaliation for making inquiries or
disclosures concerning employee wages. Those bills would also
have established more restrictive standards by requiring an
employer to establish that a factor used by the employer to pay
an employee more than an employee of the opposite sex was job
related, consistent with business necessity, and not derived
from a sex-based differential in compensation, and that the
employer's purpose could not be accomplished by less
discriminatory alternative means.
The Fair Pay Act (H.R. 438/S. 168, 113th Congress) would have
expanded the scope of the EPA to include racial and ethnic
minority protection and narrowed the "factors other than sex"
upon which an employer could rely to justify a wage
differential. Those bills would also have substituted
"equivalent jobs" for an "equal" work standard. Equivalent jobs
are those whose composite of skill, effort, responsibility, and
working conditions are equivalent in value (or worth to the
employer), even if the jobs are dissimilar. Those prior federal
efforts failed to move out of their respective houses. The Fair
Pay Act was reintroduced last year as H.R. 1787 (Norton, 114th
Congress) and remains in its first committee.
That being said, there has been more movement on the state
front. A new California law, SB 358 (Jackson, Ch. 546, Stats.
2015) was signed by the governor last year. SB 358 requires
that men and women doing substantially similar work under
similar working conditions be paid equally, unless the employer
AB 1676 (Campos and Gonzalez)
Page 3 of ?
can demonstrate that the pay differential is based on certain
enumerated factors. This bill would further clarify that prior
salary shall not, by itself, justify any disparity in
compensation.
This bill passed out of the Senate Labor & Industrial Relations
Committee on June 22, 2016 with a vote of 5-0.
CHANGES TO EXISTING LAW
Existing law bars an employer from requiring an employee to
refrain from disclosing the amount of his or her wages,
requiring an employee to sign a waiver or other document that
denies the employee the right to disclose the amount of his or
her wages or discharge, or formally disciplining, or otherwise
discriminating against an employee who discloses the amount of
his or her wages. (Lab. Code Sec. 232.)
Existing law 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. (Lab. Code Sec. 1197.5.)
Existing law establishes exceptions to this prohibition where
the payment is made pursuant to a seniority system, a merit
system, a system which measures earnings by quantity or quality
of production, or a differential based on any bona fide factor
other than sex. (Lab. Code Sec. 1197.5.)
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, or who reduces the wages of any employee in order
to comply with wage protections for an employee of the opposite
sex. (Lab. Code Sec. 1199.5.)
This bill would clarify that prior salary, by itself, must not
justify any disparity in compensation between workers of the
opposite sex.
This bill would make findings and declarations on the wage
differential between men and women, recent case law, and that
AB 1676 (Campos and Gonzalez)
Page 4 of ?
this bill is a codification of existing law.
COMMENT
1.Stated need for the bill
According to the author:
According to a recent report from the Institute for Women's
Policy Research, the gender wage gap in the United States will
not close until 2058 if progress continues at its current
rate. But perhaps our slow rate of progress is due at least in
part because we have allowed employers to preserve historical
inequities.
Because changing jobs is often the best opportunity women have
to increase their pay, we need to make sure they are not
penalized by prior salaries that may well have been
discriminatory. The impact of prior salaries is particularly
concerning in certain industries and across racial lines. For
example, women in Silicon Valley with advanced degrees are
making more than 70 percent less than men with the same
degrees. And California has one of the largest wage gaps for
African American and Hispanic women, who make just 64 and 44
cents, respectively, for every $1 a white man makes. These
depressed salaries only serve to devalue a woman's worth and
make it harder for her to negotiate better pay.
The Women's Foundation of California supports this measure and
states, "By creating a less biased structure for negotiating pay
during the hiring process, AB 1676 will be a proactive way to
help empower women to negotiate a fair salary and hopefully get
us closer to achieving pay equity in California."
2.Using prior salary history to determine pay disproportionality
effects women
As provided in this bill's legislative findings and
declarations, "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. [?] When employers make salary decisions during the hiring
AB 1676 (Campos and Gonzalez)
Page 5 of ?
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."
The California Federation of Teachers supports this measure and
states, "Recently, government officials have started to
recognize the discriminatory impact that prior salaries can have
on women in the job market. This past year, the Chair of the
Equal Employment Opportunity Commission advised employers on how
to ensure equal pay for equal work, including eliminating
'discriminatory pay gaps on the basis of prior salary.' Basing
an employee's compensation off of their previous salary puts
women at a disadvantage because their salary is then just
compounded with any past biases or negotiation disadvantages.
It becomes a cycle that follows women for the entirety of their
career. The value of each position should be based on its
duties, and the skill, education, and experience of an
applicant, not on a person's sex. Research has shown that wage
transparency raises wages and reduces disparity. AB 1676
(Campos) will move us closer to achieving pay equity in
California."
A large coalition of stakeholders were opposed to a prior
version of this bill that would have prohibited an employer from
seeking salary history information, and would have required an
employer, except state and local government employers to provide
the pay scale for a position to an applicant for employment.
The author subsequently amended the bill to clarify that prior
salary, by itself, must not justify any disparity in
compensation between workers of the opposite sex. With those
amendments, all opposition was removed.
3.Bill may allow employers to consider salary history in
combination with other factors to justify a wage differential
This bill would prohibit an employer from using an employee's
prior salary history to, by itself, justify a gender wage
differential. The operative statute, however, allows an
employer to consider a bona fide factor, such as education,
training, or experience to justify salary. A strict reading of
the statute would limit an employer to using only one bona fide
factor to justify a gender wage differential. Another
AB 1676 (Campos and Gonzalez)
Page 6 of ?
reasonable interpretation of the statute would allow an employer
to use multiple bona fide factors (e.g., education and
experience) to justify paying an employee of the opposite sex
less. The language of this bill, as applied to the former
interpretation, would prohibit any consideration of salary
history. However, if multiple bona fide factors may be used,
this bill would allow an employer to justify a gender wage
differential based, at least in part, on salary history so long
as another factor was used as well.
Support : Alliance of Californians for Community Empowerment;
American Association of University Women; California Asset
Building Coalition; California Child Care Resource and Referral
Network; California Domestic Workers Coalition; California
Latinas for Reproductive Justice; California Partnership;
California Women's Law Center; California Work and Family
Coalition; Child Care Law Center; Courage Campaign; Equal Rights
Advocates; Legal Aid Society Employment Law Center; Mujeres
Unidas y Activas; National Association of Social
Workers-California Chapter; National Council of Jewish Women;
Parent Voices; Raising California Together; Santa Barbara
Women's Political Committee; Santa Clara County Board of
Supervisors; The Center for Popular Democracy; The Opportunity
Institute; The Women's Foundation of California; Tradeswomen,
Inc.; Voices for Progress; Western Center on Law and Poverty; 9
to 5 California
Opposition : None Known
HISTORY
Source : California Employment Lawyers Association
Related Pending Legislation : None Known
Prior Legislation :
SB 358 (Jackson, Ch. 546, Stats. 2015) See Background.
AB 1017 (Campos, 2015) was substantially similar to the
introduced version of this bill. AB 1017 was vetoed by Governor
Brown who stated that the bill would broadly prohibit employers
from obtaining relevant information with little evidence that
the prohibition would assure more equitable wages.
AB 1676 (Campos and Gonzalez)
Page 7 of ?
AB 1354 (Dodd, 2015) would enact the Equal Pay for Equal Work
Act of 2015 and require an employer with 100 or more employees,
prior to becoming a contractor or subcontractor with the state,
to submit an income equality program to the Department of Fair
Employment and Housing for approval and certification and
require the income equality program to include the collection of
summary data on the compensation paid to employees, including
data sorted by gender and race, and policies designed to ensure
income equality and prevent unlawful discrimination. AB 1354 is
currently in the Assembly Appropriations Committee.
ACR 50 (Gonzalez, 2015) would proclaim April 14, 2015, as Equal
Pay Day in recognition of the need to eliminate the gender gap
in earnings by women and to promote policies to ensure equal pay
for all. ACR 50 is currently on the Senate Floor.
AB 2555 (Oropeza, 2006) would have revised the California Equal
Pay Act to authorize an award of civil penalties to be paid to
the Labor and Workforce Development Agency and would have
required specified employers to provide annual statements to
employees setting forth job title, wage rate, and how the wages
were calculated. AB 2555 would have required the creation of
the Equal Pay Commission to study and report wage disparities
between men and women and between minorities and nonminorities.
Governor Schwarzenegger vetoed this bill because he believed
that, although the historical trend of women earning less than
men for doing the same work must be stopped, the provisions of
the bill would not help achieve this goal.
AB 169 (Oropeza, 2005) would have authorized an award of EPA
violation civil penalties with 75 percent of the penalties going
to the DLSE and 25 percent going to the employee. Governor
Schwarzenegger vetoed and noted that current state and federal
laws forbid paying an individual lower wages on account of
gender and provide stiff civil and criminal penalties against
employers that do so. He argued that the bill's elimination of
judicial discretion to modify the penalty coupled with the
massive increases in fines would do nothing more than increase
frivolous litigation and could lead to the same shakedown
lawsuits that the citizens of California voted to curb when they
passed Proposition 64 in 2004.
AB 2317 (Oropeza, 2004) would have increased liquidated damages
payable by an employer to an employee for violating the
AB 1676 (Campos and Gonzalez)
Page 8 of ?
California EPA, from an amount equal to the pay differential to
treble that amount. AB 2317 would have further increased the
liquidated damages to five times the amount of the pay
differential, if it is determined that the employer willfully
violated this provision. Governor Schwarzenegger vetoed the
bill because he did not believe it was necessary in order to
achieve pay equity
Prior Vote :
Senate Labor & Industrial Relations Committee (Ayes 5, Noes 0)
Assembly Floor (Ayes 47, Noes 29)
Assembly Appropriations Committee (Ayes 13, Noes 6)
Assembly Labor and Employment Committee (Ayes 4, Noes 2)
**************