BILL ANALYSIS                                                                                                                                                                                                    Ó



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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