BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 358|
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THIRD READING
Bill No: SB 358
Author: Jackson (D), et al.
Amended: 5/12/15
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 4-0, 4/22/15
AYES: Mendoza, Jackson, Leno, Mitchell
NO VOTE RECORDED: Stone
SENATE JUDICIARY COMMITTEE: 5-1, 4/28/15
AYES: Jackson, Hertzberg, Leno, Monning, Wieckowski
NOES: Anderson
NO VOTE RECORDED: Moorlach
SENATE APPROPRIATIONS COMMITTEE: 5-0, 5/18/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NO VOTE RECORDED: Bates, Nielsen
SUBJECT: Conditions of employment: gender wage differential
SOURCE: Author
DIGEST: This bill revises the California Equal Pay Act to
prohibit an employer from paying any of its employees at wage
rates less than 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. This bill also revises the "bona fide factor"
exception in existing law to require the employer to prove: (1)
the factor is not based on or derived from a sex-based
differential in compensation and is consistent with a business
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necessity, as specified; such as difference in education,
training, or experience that is job related with respect to the
position in question; (2) each factor relied upon is applied
reasonably; and (3) the factors relied upon account for the
entire pay differential. This bill defines "business necessity"
as an overriding legitimate business purpose such that the
factor relied upon effectively fulfills the business purpose it
is supposed to serve. This bill also prohibits discrimination
or retaliation against an employee who inquires about the wages
paid to other employees.
ANALYSIS:
Existing law, under the California Equal Pay Act (Act):
1)Prohibits an employer from paying any 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 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. (Labor Code §1197.5(a).)
2)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 (DLSE) which may supervise the payment of wages
and interest found to be due. (Labor Code §1197.5)
3)Requires every employer to maintain records of the wages and
wage rates, job classifications, and other terms and
conditions of employment of the persons employed by the
employer, which must be kept on file for two years. (Labor
Code §1197.5(d).)
4)Authorizes any employee to file a complaint with the DLSE that
the wages paid are less than the wages to which the employee
is entitled under the Act, and the DLSE is required to
investigate these complaints, as specified. (Labor Code
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§1197.5(e).)
5)Authorizes the Department of Industrial Relations (DIR) or the
DLSE to 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 for violations of the Act, and are entitled to recover
costs of suit. (Labor Code §1197.5(f).)
6)Provides that any employee receiving less than the wage to
which the employee is entitled 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. (Labor Code §1197.5(g).)
7)Provides that a civil action to recover wages under the Act
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(h).)
8)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. (Labor Code §232)
This bill:
1)Prohibits an employer from paying 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:
a) The pay differential is based upon one or more of the
following factors:
i) A seniority system;
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ii) A merit system;
iii) A system that measures earnings by quantity or
quality of production; or
iv) 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, such
as a difference in education, training, or experience
that is job related with respect to the position in
question;
b) Each factor relied upon is applied reasonably; and
c) The one or more factors relied upon account for the
entire pay differential.
2)Extends the employer's record retention requirement from two
to three years.
3)Prohibits 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 the Act.
4)Makes it unlawful for an employer to 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 granted by this bill.
5)Extends the existing enforcement mechanisms, as specified, for
wage discrimination under the Act to claims for retaliation,
and provides a one-year statute of limitations for retaliation
claims.
6)Authorizes 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 the Act 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.
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Also requires a civil action to recover wages for retaliation
to be commenced no later than one-year after the cause of
action occurs.
7)Makes various related legislative findings and declarations
and makes several technical, non-substantive changes.
Background
Research on gender pay disparity . According to the American
Association of University Women (AAUW) for full-time year-round
work today that number stands at 78% for women compared to their
male counterparts. AAUW also ranked the wage gap for individual
states in the U.S., California ranking 5th with a gap of 84%.
AAUW also noted that the pay gap is worse for women of color,
with Hispanic and African American women making 54% and 64% of
white men's earnings respectively.
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% of the wage gap, 41% 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% of men's wages - an 8% unexplained
difference that researchers suggest could be influenced by
discrimination. A 2013 Congressional Research 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%.
Legislative efforts 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
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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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee, the DIR
indicates that it will incur costs of $127,000 in 2015-16 and
$120,000 ongoing (special funds) to implement the provisions of
this bill.
SUPPORT: (Verified5/20/15)
9to5 California, National Association of Working Women
9to5, National Association of Working Women
Alliance of Californians for Community Empowerment
American Association of University Women
American Association of University Women - California
Bet Tzedek Legal Services
Business & Professional Women of Nevada County
California Child Care Resource and Referral Network
California Employer Law Center
California Federation of Teachers, AFT, AFL-CIO
California Labor Federation, AFL-CIO
California Nurses Association
California Partnership
California Rural Legal Assistance Foundation, Inc.
California School Employees Association, AFL-CIO
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California Women Lawyers
California Women's Law Center
California Work and Family Coalition
Career Ladders Project
Center for Popular Democracy
Centro Legal de la Raza
Child Care Law Center
Communications Workers of America, AFL-CIO, CLC Local 9003
Communications Workers of America, ALF-CIO, District 9
Community Action Fund of Planned Parenthood of Orange and San
Bernardino Counties
Consumer Attorneys of California
Council on American-Islamic Relations, California Chapter
County of Santa Cruz, Board of Supervisors
Courage Campaign
Glendale City Employees Association
La Raza Centro Legal
Maintenance Cooperation Trust Fund
Monterrey County Board of Supervisors
Mujeres Unidas y Activas
National Council of Jewish Women-CA
National Domestic Workers Alliance
National Partnership for Women & Families
National Women's Law Center
Organization of SMUD Employees
Parent Voices
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
Planned Parenthood Northern California Action Fund
Raising California Together
Redlands Area Democratic Club
Restaurant Opportunities Centers United
San Bernardino Public Employees Association
San Diego County Court Employees Association
San Francisco Unified School District
San Luis Obispo County Employees Association
TradesWomen Inc.
Ultra Violet
Western Center on Law and Poverty
Women in Non Traditional Employment Roles
Women's Foundation of California
Women's Law Project
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OPPOSITION: (Verified5/20/15)
None received
ARGUMENTS IN SUPPORT: Proponents note that ending the gender
wage gap would cut the poverty rate for working single mothers
by nearly half, from 28.7% to 15%. 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 argue
that existing 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 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.
Prepared by:Deanna Ping / L. & I.R. / (916) 651-1556
5/20/15 16:50:31
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