BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: SB 358 Hearing Date: April 22,
2015
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|Author: |Jackson |
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|Version: |April 6, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Deanna Ping |
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Subject: Conditions of employment: gender wage differential
KEY ISSUE
Should the Legislature amend the Equal Pay Act to require
employees receive equal pay for work of a comparable character
and remove the "same establishment" provision?
Should the Legislature revise the "bona fide factor other than
sex provision" in the Equal Pay Act to require the employer to
prove a business necessity for a pay differential?
Should the Legislature explicitly prohibit retaliation or
discrimination against employees who disclose, discuss, or
inquire about their own or co-workers' wages for the purpose of
enforcing their rights under the Equal Pay Act?
ANALYSIS
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
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discriminating against an employee who discloses the amount of
his or her wages. (Labor Code §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, except where the payment is made pursuant to a:
a) a seniority system
b) merit system
c) system which measures earnings by quantity or
quality of production, or a differential based on any
bona fide factor other than sex.
(Labor Code §1197.5)
Existing law states that any employer who violates the above
section is liable to the amount of the employee's wages and
interest that the employee is deprived in addition to liquidated
damages, administered and enforced by the Division of Labor
Standards Enforcement which may supervise the payment of wages
and interest found to be due. (Labor Code §1197.5)
Existing law requires employers to maintain records to 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 two years. (Labor Code §1197.5)
Existing law states the Division of Labor Standards Enforcement
may also commence and prosecute 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. A
civil action to recover wages 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. (Labor
Code §1197.5)
Existing law states that an employer that pays or causes to be
paid any employee a wage less than the rate paid to an employee
of the opposite sex and required by Section 1197.5 is guilty of
a misdemeanor and is punishable by a fine of not more than ten
thousand dollars or by imprisonment for not more than six
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months. (Labor Code §1199.5)
This Bill prohibits an employer from paying any employee at wage
rates less than the rates paid to employees of the opposite sex
for work of a comparable character on jobs the performance of
which requires comparable skills, effort, and responsibility ,
and that are performed under similar working conditions, except
where the employer demonstrates:
1) That the pay 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) Cost-of-living differences due to geographic location
e) 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.
2) Each factor relied upon is applied reasonably.
3) That one of more factors relied upon account for the entire
differential.
This bill also :
1) Removes the same establishment requirement
2) Defines "business necessity" as an overriding legitimate
business purpose that the factor is necessary to the safe
and efficient operation of the business, that the factor
relied upon effectively fulfills the business purpose it is
supposed to serve, and there is no alternative practice to
the factor relied upon that would accomplish the business
purpose.
3) Defines "work of a comparable character" as work, the
requirements of which, are substantially equivalent when
viewed as a composite of level of skills, effort,
responsibility, and working conditions.
4) Prohibits an employer from discharging, discriminating
or retaliating against, any employee by reason of any
action taken by the employee to invoke or assist in any
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manner the enforcement of this section.
5) States that an employer shall not prohibit an employee
from disclosing the employee's own wages, discussing the
wages of others, or inquiring about another employee's
wages if the purpose of the disclosure, discussion, or
inquiry is to invoke or enforce the rights under the Equal
Pay Act.
COMMENTS
1. Research on Gender Pay Disparity
There have been numerous studies dedicated to calculating
disparities in earnings between men and women in the workplace
over the last fifty years. In 1963, women who worked full-time
year-round made 59 cents on average for every dollar earned by
a man and according to the American Association of University
Women (AAUW) for full-time year-round work today that number
stands at 78 percent for women compared to their male
counterparts, a gap of 22 cents. AAUW also ranked the wage gap
for individual states in the US, California ranking 5th with a
gap of 84 percent. AAUW also notes that the pay gap is worse
for women of color, with Hispanic and African American women
making 54 percent and 64 percent of white men's earnings
respectively. Although the gap narrowed between the 1970s and
1990s, it has largely remained between 76 and 78 cents since
2001.
This gap has narrowed due to various factors, including
women's progress in education as well as workforce
participation. A study from Francine D. Blau and Lawrence M.
Khan, "The Gender Pay Gap: Have Women Gone as Far as They
Can?" discuss that while factors such as educational
attainment, experience, demographic characteristics, job type,
industry, or union status explain about 49 percent of the wage
gap, 41 percent of the gap is not explained by such factors.
Meaning if women had the same education, experience,
demographic characteristics, industrial and occupational
distribution, and union coverage as men, the wage ratio would
rise to about 91 percent of men's wages - an 8 percent
unexplained difference that researchers suggest could be
influenced by discrimination. A 2013 Congressional Research
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Service report "Pay Equity: Legislative and Legal
Developments" referenced a study commissioned by the U.S.
Department of Labor that used a different data source than
Blau and Kahn from 2007 and a slightly different set of
personal and human capital characteristic controls. The study
found an unexplained earnings differential between 5 and 7
percent.
2. Legislative Effort for Pay Equity
On a federal level, the Equal Pay Act of 1963 prohibits
covered employers from paying lower wages to female employees
than male employees for "equal work" on jobs requiring "equal
skill, effort, and responsibility" and performed under similar
working conditions at the same location. The most recent piece
of pay equity legislation signed into law by President Obama
was the Lilly Ledbetter Act of 2009 which extends the time
period in which an employee can file a claim to recover lost
wages due to discrimination. Other pay equity bills that are
under consideration at the federal level include the Paycheck
Fairness Act which would provide greater wage transparency as
well as the Fair Pay Act which would substitute "equivalent
jobs" for the "equal" work standard.
California enacted the California Equal Pay Act in 1949 with
"equal pay for equal work" language, similar to the federal
Equal Pay Act of 1963. States such as Alaska, Arkansas, Idaho,
Illinois, Maine, Maryland, Massachusetts, North Dakota,
Oklahoma, Oregon, South Dakota, Tennessee, West Virginia, have
state Equal Pay Acts with standards of equal pay for work of a
substantially similar or comparable character. And according
to a Fact Sheet from the Women's Bureau ten states, including
California, have enacted state laws to address employer wage
secrecy policies and increase wage transparency.
3. Need for this bill?
According to the author's office, working women in California
continue to make less than men for the same or substantially
equal work and such a persistent disparity in earnings across
every occupation has a significant impact on the welfare and
economic security of millions of women and their families. As
a group, working women in California earn a median of 84 cents
to every dollar earned by a man.
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The author's office states that while California has laws
which attempt to address pay inequality, including the
California Equal Pay Act, labor code provisions codifying the
Act contain out-of-date terms as well as loopholes that make
it difficult to enforce in practice. In addition, while other
Labor Code provisions prohibit retaliation against employees
for disclosing wages, there is currently no specific
protection for inquiring about the wages of other employees if
the purpose of such inquiry is to exercise one's right to be
paid equally for equal work.
SB 358 would require equal pay for work "of a comparable
character" and eliminate the same establishment requirement,
revise the bona fide factor other than sex defense to require
the employer to prove a business necessity, and discourage pay
secrecy by explicitly prohibiting retaliation or
discrimination against employees who disclose, discuss, or
inquire about their own or co-workers' wages for the purpose
of enforcing their rights under the Equal Pay Act.
4. Proponent Arguments :
Proponents note that ending the gender wage gap would cut the
poverty rate for working single mothers by nearly half, from
28.7 percent to 15 percent. They note that as a group working
women in California lose over $33 billion each year, with the
problem even worse for women of color. Proponents specifically
bring attention to the fact that the Latina gender wage gap in
higher in California than any other state in the union.
Proponents argue that California's pay disparities are unfair
and adversely affect women's and families' financial health
and economic opportunities for the duration of each working
woman's lifetime.
Proponents argue that current laws have been ineffective in
closing the gender-based pay gap, noting that the California
Equal Pay Act has been in effect for over 65 years, with the
last revision in 1985. Proponents contend that its protections
sorely need to be strengthened and updated. Proponents argue
that SB 358 will strengthen California's existing Equal Pay
Act by eliminating loopholes that prevent effective
enforcement and powering employees to discuss pay without
fear of retaliation. Proponents specifically argue that SB 358
will ensure employees performing substantially equivalent work
are paid fairly by requiring equal pay for work of a
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comparable character, eliminating the outdated same
establishment requirement, by replacing the any bona fide
factor other than sex catch-all defense with more specific
affirmative defenses and strengthen protections for workers
who inquire about or discuss their wages or those of their
coworkers.
5. Opponent Arguments :
Opponents such as the California Chamber of Commerce and Civil
Justice Association of California take an oppose unless
amended position on SB 358, arguing the current language will
create unnecessary litigation and limit an employer's ability
to compensate employees for their skill, experience and
education. They present various concerns and suggestions for
SB 358 including: determining "comparable" work for different
job duties can be extremely subjective, leading to different
interpretations and, thus the potential for litigation and
propose "substantially similar" instead, the definition of
"business necessity" has been used in specific circumstances
in state regulations and propose the definition under Title
VII, and lastly express concern with the listed bona fide
factors arguing it would be difficult to prove education,
training, or experience as "necessary" for the "safe"
operation of the business.
Opponents such as the National Federation of Independent
Businesses argue that California employees are currently
afforded significant liberties in the workplace as it relates
to their rights and opportunities and their ability to review
their wages, benefits, hours and other circumstances. They
contend that there are circumstances however, in which
employers have the right and responsibility to protect their
workplace and employees from invasion of privacy and other
malfeasance.
6. Prior Legislation :
AB 2555 of 2006 (Oropeza) - would have increased the damages
for which an employer may be liable for gender-based pay
discrimination and impose a civil penalty for violations of
law, as specified; establish a state Equal Pay Commission as
specified; require employers of 50 or more to provide each
employee with a written job statement. This bill was vetoed by
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Governor Schwarzenegger.
AB 169of 2005 (Oropeza) - would have increased the amount of
liquidated damages due to employees who are paid unfairly in
violation of existing law relating to gender-based payment
discrimination. This bill was vetoed by Governor
Schwarzenegger.
AB 2317 of 2004 (Oropeza) -would have increased the amount of
liquidated damages paid for violations of state law
prohibiting gender-based pay discrimination. This bill was
vetoed by Governor Schwarzenegger.
SUPPORT
California Employment Lawyers Association (Co-Sponsor)
Equal Rights Advocates (Co-Sponsor)
Legal Aid Society-Employment Law Center (Co-Sponsor)
Bet Tzedek Legal Services
Business & Professional Women of Nevada County
California Applicants' Attorneys Association
California Federation of Teachers, AFL-CIO
California Labor Federation, AFL-CIO
California Rural Legal Assistance Foundation
California Women's Law Center
Centro Legal de la Raza
Communication Workers of America, Local 9003
Consumer Attorneys of California
County of Santa Cruz Board of Supervisors
National Council of Jewish Women-CA
Organization of SMUD Employees
Planned Parenthood Action Fund of Orange and San Bernardino
Counties
Planned Parenthood Action Fund of Santa Barbara, Ventura & San
Luis Obispo Counties
Planned Parenthood Action Fund of the Pacific Southwest
Planned Parenthood Affiliates of California
San Bernardino Public Employees Association
San Diego County Court Employees Association
San Luis Obispo County Employees Association
The Glendale City Employees Association
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The Maintenance Cooperation Trust Fund
The Women's Foundation of California
Women in Non Traditional Employment Roles
Women's Law Project
9to5 Los Angeles
OPPOSITION
California Chamber of Commerce
Civil Justice Association of California
The National Federation of Independent Business
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