Amended in Senate May 12, 2015

Amended in Senate May 5, 2015

Amended in Senate April 6, 2015

Senate Bill No. 358

Introduced by Senator Jackson

(Coauthors: Senators begin delete Hall and Leno end delete begin insert Hall, Hancock, Leno, Mitchell, and Pavley end insert )

(Coauthors: Assembly Members begin insert Chá end insert begin insert vez, end insert Chu, begin insert Dodd, end insert Eduardo Garcia, Gonzalez, begin delete and Rodriguez end delete begin insert Rodriguez, and Weber end insert )

February 24, 2015

An act to amend Section 1197.5 of the Labor Code, relating to private employment.

LEGISLATIVE COUNSEL’S DIGEST

SB 358, as amended, Jackson. Conditions of employment: gender wage differential.

Existing law regulates the payment of compensation to employees by employers and prohibits an employer from conditioning employment on requiring an employee to refrain from disclosing the amount of his or her wages, signing a waiver of the right to disclose the amount of those wages, or discriminating against an employee for making such a disclosure.

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 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. 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.

This bill would revise that prohibition to eliminate the requirement that the begin delete pay end delete begin insert wage end insert differential be within the same establishment, and instead would prohibit an employer from paying any of its employees at wage rates less than those paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, as specified. The bill would revise and recast the exceptions to require the employer to affirmatively demonstrate that a begin delete pay end delete begin insert wage end insert differential is based upon one or more specified factors, including a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor that is not based on or derived from a sex-based differential in compensation and is consistent with a business necessity, as defined. The bill would also require the employer to demonstrate that each factor relied upon is applied reasonably, and that the one or more factors relied upon account for the entire differential. The bill would prohibit an employer from discharging, or in any manner discriminating or retaliating against, any employee by reason of any action taken by the employee to invoke or assist in any manner the enforcement of these provisions. The bill would authorize an employee who has been discharged or discriminated or retaliated against, in the terms and conditions of his or her employment because the employee engaged in any conduct delineated in these provisions, to 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. The bill would prohibit an employer from prohibiting an employee from disclosing the employee’s own wages, discussing the wages of others, begin delete or end delete inquiring about another employee’s begin delete wages if the purpose of the disclosure, discussion, or inquiry is to invoke or enforce the rights granted by end delete begin insert wages, or aiding or encouraging any other employee to exercise his or her rights under end insert these provisions. The bill would also increase the duration of employer recordkeeping requirements from 2 years to 3 years. By changing the definition of a crime, this bill would impose a state-mandated local program.

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 the following:

(a) In 2014, the gender wage gap in California stood at 16 cents
on the dollar. A woman working full time year round earned an
average of 84 cents to every dollar a man earned. This wage gap
extends across almost all occupations reporting in California. This
gap is far worse for women of color; Latina women in California
make only 44 cents for every dollar a white male makes, the biggest
gap for Latina women in the nation.

(b) While the state’s overall wage gap is slightly lower than the
national average of 78 cents to the dollar, the persistent disparity
in earnings still has a significant impact on the economic security
and welfare of millions of working women and their families.
Collectively, women working full time in California lose
approximately $33,650,294,544 each year due to the gender wage
gap. The wage gap contributes to the higher statewide poverty rate
among women, which stands at 18 percent, compared to
approximately 15 percent for men, and the poverty rate is even
higher for women of color and single women living with children.

(c) California has prohibited gender-based begin delete pay end delete begin insert wage end insert
discrimination since 1949. Section 1197.5 of the Labor Code was
enacted to redress the segregation of women into historically
undervalued occupations, but it has evolved over the last four
decades so that it is now virtually identical to the federal Equal
Pay Act of 1963 (29 U.S.C. Sec. 206(d)). However, the state
provisions are rarely utilized because begin delete many loopholes make it
nearly impossible end delete begin insert the current statutory language makes it difficult end insert
to establish a successful claim.

(d) Pay secrecy also contributes to the gender begin delete pay end delete begin insert wage end insert gap,
because women cannot challenge begin delete pay end delete begin insert wage end insert discrimination that
they do not know exists. Although California law prohibits
employers from banning begin delete pay end delete begin insert wage end insert disclosures and retaliating
against employees for engaging in this activity, in practice many
employees are unaware of these protections and others are afraid
to exercise these rights due to potential retaliation.

(e) To eliminate the gender wage gap in California, the state’s
equal pay provisions and laws regarding begin delete pay end delete begin insert wage end insert disclosures
must be improved.

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 begin delete pay end delete begin insert wage end insert 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 that is not based on or derived from a
sex-based differential in compensation and is consistent with a
business necessity, such as a difference in education, training, or
experience that is job related with respect to the position in
question. 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 begin delete serve, and no alternative employment practice would
serve the same legitimate business purpose without producing a
compensation differential. end delete begin insert serve. This defense shall not apply if
the employee demonstrates that an alternative employment practice
exists that would serve the same business purpose without
producing the wage differential. end insert

(2) Each factor relied upon is applied reasonably.

(3) The one or more factors relied upon account for the entire
begin delete pay end delete begin insert wage end insert differential.

(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, begin delete or end delete inquiring about another employee’s begin delete wages
if the purpose of the disclosure, discussion, or inquiry is to invoke
or enforce the rights granted by end delete begin insert wages, or aiding or encouraging
any other employee to exercise his or her rights under end insert 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 begin delete to recover wages end delete begin insert brought end insert under this
subdivision may be commenced no later than one year after the
cause of action occurs.

SEC. 3.  

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.