BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: SB 1063 Hearing Date: April 13,
2016
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|Author: |Hall |
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|Version: |February 16, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Brandon Seto |
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Subject: Conditions of employment: wage differential: race or
ethnicity
KEY ISSUE
Should the Legislature amend the Equal Pay Act to prohibit
employers from paying employees a wage rate less than the rate
paid to employees of a different race or ethnicity for
substantially similar work?
ANALYSIS
Existing law
Prohibits an employer from requiring an employee to
refrain from disclosing the amount of his or her wages, or
discharging, formally disciplining, or otherwise
discriminating against an employee who discloses the amount
of his or her wages (Labor Code §232).
States that an employer shall not pay 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
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responsibility, and performed under similar working
conditions.
The only exceptions to this standard are when the wage
differential is based upon one or more of the following
factors:
1) A seniority system.
2) A merit system.
3) A system that measures earnings by
quantity or quality of production.
4) A bona fide factor other than sex,
such as education, training, or experience which
only applies if the employer demonstrates that it
is not based on a sex-based differential in
compensation, is job related, and is consistent
with a business necessity. "Business necessity"
means an overriding legitimate business purpose
which the factor relied upon effectively
fulfills. This does not apply if the employee
demonstrates that an alternative business
practice would serve the same business purpose
without producing the wage differential.
(Labor Code §1197.5)
Each factor relied upon to explain the wage differential
must be applied reasonably and account for the entire wage
differential (Labor Code §1197.5).
States that any employer who violates the above section
is liable for 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 (Labor Code
§1197.5).
Requires that employers maintain records of the wages
and wage rates, job classifications, and other terms and
conditions of employment of the persons employed by the
employer (Labor Code §1197.5).
States that the Division of Labor Standards Enforcement
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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
(Labor Code §1197.5).
Specifies 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 $10,000 or by imprisonment for not more than
six months (Labor Code §1199.5).
This Bill
Expands the prohibitions laid down in the Equal Pay Act to
include discrimination based on race or ethnicity. By adding
these provisions, this bill, among other things:
Duplicates the provisions laid down in the Equal Pay Act
regarding gender, but restates them to prevent wage rate
discrimination based on race or ethnicity.
Mirrors the enforcement mechanism and penalties for wage
rate discrimination based on gender and includes
discrimination based on race or ethnicity.
COMMENTS
1. Need for this bill?
The author believes that the Equal Pay Act, in its current
form, fails to address the multifaceted consequences of biases
that permeate every aspect of our society.
While it is an improvement on the original Equal Pay Act, it
still does not recognize that wage discrimination is not
confined to women. 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 as well. Ideally, other protected classes, such as members
of the LGBTQ or disabled community should be included in this
remedy, but the addition of race and ethnicity begins the
process of making pay equity in California more inclusive.
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2. This Bill's Relationship to SB 358 (Jackson, 2015)
This bill adopts an identical approach to SB 358 in addressing
wage discrimination. It places the responsibility on the
employer to prove or demonstrate that a wage differential
between employees is not occurring as a result of a worker's
race or ethnicity. Additionally, this bill uses the
definitions specified in SB 358 regarding the nature of
"business necessity" and "substantially similar work" to close
perceived loopholes in the law which were used to justify
discriminatory wage rate differentials.
"Business necessity" is taken to mean an overriding legitimate
business purpose which validates a wage variance, such as
paying someone more because they possess a higher degree which
is essential to their duties. Only under this definition does
"business necessity" justify wage rate differences. Also, in
SB 358 "substantially similar work" replaced "equal work" as a
comparative term for wage rates. This removed the ability of
employers to use different titles in order to justify paying
unequal wage rates for people who were doing similar work.
Overall, this bill broadens the specifications set down in SB
358 and applies them to racial and ethnic protections.
3. Proponent Arguments :
Proponents argue that despite being the most diverse and
prosperous state in the nation, many California workers
continue to suffer from a chronic racial and ethnic wage gap.
A 2013 study revealed that Asian American women make 90 cents,
African American women make 64 cents, and Latina women make
just 54 cents for every dollar that a white man earns. The
wage gap is not only between men and women, as African
American men earn just 75% of the average salary of a white
male.
Proponents state that last year, SB 358 (Jackson) began to
address wage inequality by prohibiting employers from paying
employees a wage rate less than the rates paid to employees of
the opposite sex for substantially similar work. However, gaps
in the law still persist. The 65-year old California Equal Pay
Act fails to include one of the largest factors for wage
inequity - race and ethnicity. As California continues to grow
and diversify, large segments of our state's minority
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population are facing devastating economic inequality. No
employee should be denied an equal wage for an equal day of
work. SB 1063 builds upon the important steps California has
taken to address wage inequality and will set a national
standard to ensure that every worker is paid a fair and
equitable wage.
4. Opponent Arguments :
Opponents point out that SB 358 (Jackson), which expanded and
strengthened Labor Code Section 1197.5 regarding equal pay for
women, just went into effect at the beginning of this year.
SB 358 is the strongest equal pay law for women in the
country. The new standards introduced by SB 358 will likely be
tested over the next several years in litigation. In fact,
there is already a class- action lawsuit pending alleging an
equal pay violation with regard to female attorneys in the
insurance industry. While we believe that no employee should
be paid differently based upon any protected classification,
we believe that the Legislature should allow time for
employees, employers, and the courts to interpret and
implement the new boundaries of the equal pay law before
seeking to amend and expand it even further.
Opponents believe that the Legislature needs to give SB 358
sufficient time to determine whether its changes work and how
they impact the litigation environment before its provisions
are expanded. Employees who believe they have been
discriminated against with regard to pay may still seek relief
under the Fair Employment and Housing Act (FEHA). FEHA covers
all protected classifications, including race and ethnicity.
5. Prior Legislation :
SB 358 (Jackson), Chapter 546, Statutes of 2015 made various
changes to the California Equal Pay Act related to gender wage
inequality including standards relating to employer proof of
non-discrimination and replacing the qualification for
discriminatory treatment while performing "equal work" with
"substantially similar work."
SUPPORT
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California National Organization for Women (Sponsor)
American Association of University Women California
American Civil Liberties Union of California
California Domestic Workers Coalition
California Federation of Teachers
California Labor Federation, AFL-CIO
California Reinvestment Coalition
Centro Laboral de Graton
Coalition for Humane Immigrant Rights of Los Angeles
Equal Rights Advocates
Greater Sacramento Urban League
Los Angeles County Professional Peace Officers Association
National Coalition of 100 Black Women, Inc. Sacramento Chapter
Rainbow Services
San Diego County Employees Association
San Luis Obispo County Employees Association
The Greenlining Institute
The Organization of SMUD Employees
The Women's Foundation of California
United Domestic Workers of America/AFSCME Local 3930
OPPOSITION
Agricultural Council of California
California Bankers Association
California Chamber of Commerce
California League of Food Processors
California Manufacturers & Technology Association
California Pool and Spa Association
California Restaurant Association
California State Association of Counties
California Travel Association
Civil Justice Association of California
League of California Cities
National Federation of Independent Business
Western Electrical Contractors Association, Inc
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