BILL ANALYSIS Ó
SB 358
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Date of Hearing: June 24, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
SB
358 (Jackson) - As Amended May 12, 2015
SENATE VOTE: 38-0
SUBJECT: Conditions of employment: gender wage differential.
SUMMARY: Makes various changes to the California Equal Pay Act
related to gender wage inequality. Specifically, 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;
ii) A merit system;
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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.
c) The one or more factors relied upon account for the
entire wage 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 law.
4)Makes it unlawful for an employer to 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 the law.
5)Extends the existing enforcement mechanisms, as specified, for
wage discrimination under existing law 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
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her employment because the employee engaged in any conduct
delineated in the law 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.
7)Makes related legislative findings and declarations.
8) Makes several technical, non-substantive changes.
EXISTING LAW:
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 law, and the DLSE is required to
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investigate these complaints, as specified. (Labor Code
§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 law, 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 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)
FISCAL EFFECT: According to the Senate Appropriations
Committee, the Department of Industrial Relations 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.
COMMENTS: According to the author, while California has laws
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which attempt to address pay inequality (including the
California Equal Pay Act), these provisions 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.
Therefore, this bill would require equal pay for work "of a
comparable character," revise other provisions of existing law
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.
The legislative findings and declarations contained in this bill
state:
"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.
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
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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.
California has prohibited gender-based wage 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 the current statutory
language makes it difficult to establish a successful claim.
Pay secrecy also contributes to the gender wage gap, because
women cannot challenge wage discrimination that they do not
know exists. Although California law prohibits employers from
banning wage 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."
Recent Research on Gender Pay Disparity
According to the American Association of University Women (AAUW)
a woman working full-time for year-round work earns 78 cents for
every dollar earned by a male counterpart. AAUW also ranked the
wage gap for individual states in the U.S. and found that
California ranks fifth with a gap of 84 percent. AAUW also
noted 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.
This gap has narrowed due to various factors, including women's
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progress in education as well as workforce participation. A
recent study notes that, while factors such as educational
attainment, experience, demographic characteristics, job type,
industry, or union status explain about half of the wage gap, 41
percent of the gap is not explained by such factors. This means
that 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 Service report entitled "Pay
Equity: Legislative and Legal Developments," found an
unexplained earnings differential of between 5 percent and 7
percent.
Federal and State Legislative Efforts
At the 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
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state Equal Pay Acts with standards of equal pay for work of a
substantially similar or comparable character.
ARGUMENTS IN SUPPORT
Supporters state 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. Supporters 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.
Supporters contend that its protections sorely need to be
strengthened and updated.
Supporters argue that this bill 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. Supporters specifically argue that
this bill 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.
OPPOSE UNLESS AMENDED
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The California National Organization for Women (NOW) writes that
while this bill goes a long way towards addressing the
substantive inequities of the original Equal Pay Act, these
improvements "must be accompanied by a broadening of claimants
to include all forms of invidious wage discrimination." They go
on to state:
"There is no excuse in 2015 for limiting redress for
compensation differentials to a select group of women workers.
Women of color, who are paid less than white women, should be
able to make a claim under California's Equal Pay Act. Men of
color, who are paid less than white men, should be able to
make a claim under California's Equal Pay Act. Members of the
LGBTQ or disabled community paid less than their cis-gender or
able bodied counterparts should be able to make a claim under
California's Equal Pay Act."
Therefore, California NOW opposes this bill unless amended to
include protections for wage discrimination based on these
additional categories.
In response, the author's office has provided the following
statement:
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"The author notes that the letter submitted by the California
National Organization for Women (California NOW) states that
"SB 358, in its current state goes a long way in addressing
the substantive inequities of the original Equal Pay Act's
elements and defenses. . . ." This was the intended scope of
this bill. In addition, on June 29, 2014, the National
Organization for Women submitted a resolution supporting the
federal Fair Paycheck Act, the provisions of which were used
to model this bill, and lobbied Congress to pass that Act.
(See National Organization for Women, Resolution on the Fair
Paycheck Act (June 29, 2014) ?Accordingly, the author is
unable to further respond as to why the California chapter of
that organization is opposed to enacting state legislation
that is not only described as beneficial in the letter from
the California chapter, but also furthers the national
organization's resolution."
REGISTERED SUPPORT / OPPOSITION:
Support
9to5 California, National Association of Working Women
9to5, National Association of Working Women
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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 Chamber of Commerce
CalAsian Chamber of Commerce
California Child Care Resource and Referral Network
California Employer Law Center
California Employment Lawyers Association (co-sponsor)
California Federation of Teachers, AFT, AFL-CIO
California Hospital Association
California Immigrant Policy Center
California Labor Federation, AFL-CIO
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California Newspaper Publishers Association
California Nurses Association
California Partnership
California Rural Legal Assistance Foundation, Inc.
California School Employees Association, AFL-CIO
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
Civil Justice Association of California
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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
Equal Rights Advocates (co-sponsor)
Glendale City Employees Association
La Raza Centro Legal
Legal Aid Society Employment Law Center (co-sponsor)
Maintenance Cooperation Trust Fund
Monterrey County Board of Supervisors
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Mujeres Unidas y Activas
National Association of Social Workers, CA Chapter
National Council of Jewish Women-CA
National Domestic Workers Alliance
National Partnership for Women & Families
National Women's Law Center
Numerous Individuals
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
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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
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Women's Law Project
Opposition (unless amended)
California National Organization of Women
Analysis Prepared by:Ben Ebbink / L. & E. / (916)
319-2091