BILL ANALYSIS Ó
SB 358
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Date of Hearing: July 7, 2015
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
SB
358 (Jackson) - As Amended May 12, 2015
SENATE VOTE: 38-0
SUBJECT: Conditions of employment: gender wage differential
KEY ISSUES:
1)Should California's Equal Pay Act be amended to ensure that
employees receive equal pay for "substantially similar work"
(as opposed to "equal work") regardless of their Sex?
2)Should the California Equal Pay Act be clarified to expressly
state that the employer has the burden of proving that a wage
disparity is based on a legitimate factor, other than sex, as
opposed TO the plaintiff having the burden of proving that the
wage differential is not justified?
3)Should an employer be prohibited from taking adverse actions
against employees who invoke either their rights under the
Equal Pay Act, or who discuss their wages with fellow
employees?
SYNOPSIS
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Enacted in 1949, California's Equal Pay Act targets wage
discrimination against women by prohibiting an employer from
paying an employee a wage rate that is less than the rate of an
employee of the opposite sex who does comparable work. Although
the language of the Equal Pay Act is gender neutral (i.e. it
would prohibit paying a woman more than a man for the same
work), the Act was designed to address wage discrimination
against women. As the author notes, despite some considerable
improvement since 1949, women still make less than men, even
when they perform substantially the same work as men. The
author believes that certain ambiguities and outdated terms have
made the equal pay law less effective than it might otherwise
be. SB 358, therefore, proposes a number of procedural and
substantive changes to the Equal Pay Act in order to make it
easier for a victim of wage discrimination to identify an
unlawful wage disparity and seek an appropriate remedy. Most
notably, the bill changes terminology so that an employee can
more reasonably prove that he or she received lower wages for
"substantially similar" work; clarifies the employer's burden to
demonstrate that a wage disparity is based on some legitimate
factor other than sex; and prohibits employers from interfering
with employees' ability to discuss and share information about
their wages. The bill is supported by an array of groups
representing women, labor, community service organizations,
business, and consumer and employment lawyers. The bill is
opposed by the California chapter of the National Organization
of Women, unless it is amended to extend the Equal Pay Act's
provisions to wage discrimination based on racial, ethnic,
LGBTQ, and disability status. The bill recently passed out of
the Assembly Labor and Employment Committee on a 6-1 vote. The
Committee suggests a clarifying amendment that the author may
wish to consider.
SUMMARY: Seeks to strengthen the California Equal Pay Act by,
among other things, clarifying the relative burdens of proof and
prohibiting retaliation against employees for disclosing or
discussing their wages with co-workers. Specifically, this
bill:
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1)Makes findings and declarations relating to the continuing,
persistent, and structural disparities in wages between men
and women.
2)Modifies an existing prohibition on sex-based wage
discrimination by prohibiting 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"
(as opposed to "equal 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:
i) A seniority system.
ii) A merit system.
iii) A system that measures earnings by quantity or
quality of production.
iv) A bona fide factor that is not based on sex, as
specified, and is consistent with a business necessity,
as defined, such as a difference in job-related
education, training, or experience. However 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.
b) Each factor that is relied upon is applied reasonably.
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c) The one or more factors relied upon account for the
entire wage differential.
3)Eliminates a requirement in the existing Equal Pay Act that
the claim of discrimination be based upon a comparison of the
wages of employees in "the same establishment."
4)Increases, from two years to three, the period of time that
the employer must maintain records relating to wages and job
classifications, and other conditions of employment of the
employees.
5)Prohibits an employer from taking any adverse action against
an employee that seeks to enforce the provisions of the Equal
Pay Act. Nor shall an employer 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 another employee to exercise his or her rights
under the provisions of the Equal Pay Act.
6)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.
7)Authorizes any employee who has been discharged, discriminated
or retaliated against in violation of the Equal Pay Act to
recover, in a civil action, reinstatement, lost wages and work
benefits, including interest, and appropriate equitable
relief.
EXISTING LAW:
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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 that require
equal skill, effort, and responsibility, and that 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 Section 1197.5(a);
all other section numbers refer to the Labor Code, unless
otherwise indicated.)
2)States that any employer who violates the above 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. (Section 1197.5 (b)-(c).)
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 for two
years. (Section 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
investigate these complaints, as specified. (Section 1197.5
(e).)
5)Authorizes the Department of Industrial Relations (DIR) or the
DLSE to commence and prosecute, except as specified, a civil
action on behalf of the employee and on behalf of a similarly
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affected group of employees to recover unpaid wages,
liquidated damages, and costs. (Section 1197.5 (f).)
6)Provides that any employee receiving less than the wage to
which he or she is entitled may recover in a civil action the
balance of the wages, including interest, 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. (Section 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 an action arising out of a willful violation may
be commenced no later than three years after the cause of
action occurs. (Section 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. (Section 232.)
FISCAL EFFECT: As currently in print this bill is keyed fiscal.
COMMENTS: Sponsored by Equal Rights Advocates, SB 358 would
strengthen California's Equal Pay Act. Enacted in 1949, the
Equal Pay Act requires employers to pay men and women equal
wages if they perform equal work in the same establishment.
Although the law is gender-neutral on its face, it was intended
to correct a long history of wage discrimination against women.
The author and sponsor contend that even though the gender wage
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gap has lessened in recent years, studies show that women's
wages still lag far behind those of men. The author believes
that certain outdated terms and loopholes in the Equal Pay Act
have rendered the Act ineffective and unenforceable in practice.
According to the bill's findings and declarations, California's
Equal Pay Act has evolved, albeit incompletely, to mirror the
federal Equal Pay Act of 1963 (29 U.S.C. Section 206 (d).)
Pending legislation first introduced in 2013 by U.S. Senator
Barbara Mikulski (S. 84, 113th Congress, 2013-2014 session)
seeks to make similar changes in the federal law. This bill, as
currently print, draws from the language of the federal bill.
In an effort to address some of these inadequacies of the
California Equal Pay Act, SB 358 proposes to make a number of
procedural and substantive changes, relating to required
elements and permitted defenses, and the employee's ability to
discover wage disparities and seek appropriate remedies.
Specifically, this bill seeks to address the following:
Equal Work vs. Substantially Similar Work: The Equal Pay Act
currently prohibits an employer from paying an employee at a
wage rate that is less than the rate paid to an employee of the
opposite sex for "equal work" that requires the same level of
skill and is performed under similar conditions. Existing law,
that is, seeks to realize the reasonable demand of "equal pay
for equal work." The problem, however, is that in the modern,
highly differentiated workplaces, the work performed by two
employees may never be completely "equal," due to minor
variations in work assignments. Thus, an employer subject to a
wage discrimination challenge under the Equal Pay Act could
argue that the jobs performed by persons of opposite sex were
not "equal" in every way. This bill seeks to address this
problem by prohibiting employers from paying men and women
different wages for "substantially similar work, when viewed as
a composite of skill, effort, and responsibility, and performed
under similar work conditions." This change would require the
employee to receive equal pay for performing a job that is
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"substantially similar," though perhaps not identical, to a job
performed by a higher-paid employee of the opposite sex.
The "Same Establishment" Restriction: The Equal Pay Act
currently prohibits the employer from paying men and women
different wages for equal work only if the comparable employees
work in the "same establishment." Therefore, under existing
law, if a female manager at a department store discovered that a
similarly situated male manager at a branch across town earned
higher wages, she could not invoke the Equal Pay Act because she
and the male manager did not work at the "same establishment."
This bill remedies this disparity by deleting the reference to
the "same establishment." It need only be the same employer and
involve substantially similar work, regardless of the location
of the establishment where they work.
The Employer's Burden of Proof: The Equal Pay Act currently
permits certain exceptions to the "equal pay for equal work"
requirement. For example, an employer may pay one employee more
than another employee of the opposite sex, even if the two
employees do the same job, as long as the wage difference is
based on some factor other than sex, such as seniority, merit,
or differences in the quality or quantity of work performed.
This bill would clarify that the burden of proof is on the
employer to demonstrate the existence of one of these other
factors. That is, the employee should not have the burden of
proving that the difference in wages is based on sex. Although
it might be implicit that the burden is on the employer to
demonstrate some legitimate reason for the wage disparity, the
existing statute is silent on this point. This bill would
expressly state that the employer must demonstrate the existence
of legitimate factors, other than the sex of the employees, for
the disparity in pay.
Prohibitions on "Pay Secrecy:" Existing law (Labor Code Section
232) prohibits an employer from conditioning employment on the
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demand that an employee refrain from disclosing the amount of
his or her wages, or discriminating against an employee for
making such a disclosure. Existing law also prohibits an
employer from requiring an employee to waive his or her right to
disclose wages. This bill would expressly incorporate those
provisions into the Equal Pay Act and strengthen the Act by
barring the employer from prohibiting an employee from
discussing the wages of other employees, inquiring about another
employee's wages, or aiding or encouraging any other employee to
exercise his or her rights under the Equal Pay Act.
Other Changes: In addition to the changes noted above, this
bill also extends the period of time for which an employer must
maintain an employee's wage and job classification and other
work records from two years to three years, and extends the
existing enforcement mechanisms for wage discrimination to
claims for retaliation.
Should the Equal Pay Act be extended to other forms of
discrimination? As noted below, the California National
Organization of Women (Cal NOW) believes that the Equal Pay Act
should be updated and made more inclusive by also prohibiting
wage discrimination on the additional bases of gender, race,
ethnicity, LBGTQ, or disability status. (Cal NOW notes that
while "sex" and "gender" are often used interchangeably, the
former refers to biology and the latter to identity, and thus
both should be included.) The author, however, has informed the
Committee that, at least at this point, the bill is intended to
make significant procedural and substantive improvements to the
Equal Pay Act - which only prohibits wage discrimination based
on sex - not to fundamentally alter the scope of the Equal Pay
Act.
Possible Clarifying Amendment: This bill is apparently modeled
on U.S. Senator Mikulski's proposed federal legislation (S. 84
113th Cong., 2013-2014) and draws much of its language from that
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bill, which seeks to amend 29 U.S.C. Section 206 (d)(1)
regarding gender-based pay differentials. However, because SB
358 draws upon language in the federal bill, but not its
corresponding structure, the bill's language is not as clear as
it could be. Therefore, the Committee recommends the following
non-substantive amendment to better track both the language of
S.84 and the corresponding structure of that legislation. In
the opinion of the Committee, this amendment would not affect
meaning and would only improve readability (and thus, the
enforceability of the law, if the bill were to become law):
- Delete the subparagraph (D) on page 4 lines 23-35 and
replace it with the following:
- (D) A bona fide factor other than sex, such as
education, training or experience. This factor shall apply
only if the employer demonstrates that such a factor is not
based upon or derived from a sex-based differential in
compensation, is job-related with respect to the position
in question, and is consistent with a business necessity.
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 serve. This defense shall not
apply if the employee demonstrates that an alternative
business practice exists that would serve the same business
purpose without producing such differential.
ARGUMENTS IN SUPPORT: This bill is supported by scores of
organizations representing women, labor, business, community
service groups, local governments, legal aid societies, and
consumer and employment lawyers. Supporters claim 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 claim that working women and women of color are especially
vulnerable to low wages and wage discrimination. Supporters
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believe that SB 358 will strengthen California's existing Equal
Pay Act and help to close the gender gap in a number of
important ways. First, SB 358 will change outdated terminology
by requiring equal pay for "substantially similar work," instead
of the much harder to establish "equal work." Second, this bill
will clarify that the burden is on employers to demonstrate that
wage differentials are based on some factor other than sex.
Third, this bill will allow employees overcome the problem of
"pay secrecy" by prohibiting employers from taking adverse
action against employees who discuss wages with one another, as
well as prohibiting employers from retaliating against employees
who invoke the Equal Pay Act, or encourage co-workers to do so.
ARGUMENTS IN OPPOSITION UNLESS AMENDED: The California National
Organization for Women (Cal 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." Cal NOW asserts:
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, Cal NOW opposes this bill, unless amended to include
protections for wage discrimination based on these additional
categories.
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REGISTERED SUPPORT / OPPOSITION:
Support
California Employment Lawyer's Association (co-sponsor)
Equal Rights Advocates (co-sponsor)
Legal Aid Society Employment Law Center (co-sponsor)
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
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California Chamber of Commerce
CalAsian Chamber of Commerce
California Child Care Resource and Referral Network
California Employer Law Center
California Federation of Teachers, AFT, AFL-CIO
California Hospital Association
California Immigrant Policy Center
California Labor Federation, AFL-CIO
California Newspaper Publishers Association
California Nurses Association
California Partnership
California Professional Firefighters
California Rural Legal Assistance Foundation, Inc.
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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
City of West Hollywood
Civil Justice Association of California
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
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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 Association of Social Workers, CA Chapter
National Council of Jewish Women-CA
National Domestic Workers Alliance
National Partnership for Women & Families
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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
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
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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
Opposition (Unless Amended)
California NOW
Analysis Prepared by:Thomas Clark / JUD. / (916)
319-2334
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