BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1063|
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THIRD READING
Bill No: SB 1063
Author: Hall (D), et al.
Amended: 4/20/16
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 4-1, 4/13/16
AYES: Mendoza, Jackson, Leno, Mitchell
NOES: Stone
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Bates, Nielsen
SUBJECT: Conditions of employment: wage differential: race
or ethnicity
SOURCE: California National Organization for Women
DIGEST: This bill amends 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:
1)Prohibits an employer from requiring an employee to refrain
from disclosing the amount of his or her wages, or
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discharging, formally disciplining, or otherwise
discriminating against an employee who discloses the amount of
his or her wages (Labor Code §232).
2)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 responsibility, and performed
under similar working conditions.
3)Provides that the only exceptions to this standard are when
the wage differential is based upon one or more of the
following factors:
a) A seniority system.
b) A merit system.
c) A system that measures earnings by quantity or quality
of production.
d) 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)
4)States that each factor relied upon to explain the wage
differential must be applied reasonably and account for the
entire wage differential (Labor Code §1197.5).
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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).
6)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).
7)States that the Division of Labor Standards Enforcement 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).
8)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 Labor Code 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:
1)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.
2)Mirrors the enforcement mechanism and penalties for wage rate
discrimination based on gender and includes discrimination
based on race or ethnicity.
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Comments
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.
This bill's relationship to SB 358. This bill adopts an
identical approach to SB 358 (Jackson, Chapter 546, Statutes of
2015) 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.
FISCAL EFFECT: Appropriation: No Fiscal
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Com.:YesLocal: Yes
According to the Senate Appropriations Committee, the Department
of Industrial Relations (DIR) indicates that the potential
increase in workload resulting from the bill is unknown.
However, as an order of magnitude, if one percent of the claims
currently filed at the Department of Fair Employment and Housing
(DFEH) are instead filed with DIR's Labor Commissioner, DIR
estimates that this bill could administrative costs of $601,000
in the first year and $570,000 in subsequent years (special
fund).
SUPPORT: (Verified 5/27/16)
California National Organization for Women (source)
American Association of University Women California
American Civil Liberties Union of California
California Catholic Conference, Inc.
California Domestic Workers Coalition
California Employment Lawyers Association
California Federation of Teachers
California Labor Federation, AFL-CIO
California Reinvestment Coalition
California State Conference of the National Association for the
Advancement of Colored People
California Teachers Association
Centro Laboral de Graton
City of Compton
Coalition for Humane Immigrant Rights of Los Angeles
Courage Campaign
Equal Rights Advocates
Greater Sacramento Urban League
Los Angeles County Federation of Labor
Los Angeles County Professional Peace Officers Association
National Coalition of 100 Black Women, Inc. - Sacramento Chapter
Rainbow Services
Sacramento National Organization for Women
San Diego County Court Employees Association
San Luis Obispo County Employees Association
Service Employees International Union
The Greenlining Institute
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The Organization of SMUD Employees
The Women's Foundation of California
United Domestic Workers of America/AFSCME Local 3930
134 Individuals
OPPOSITION: (Verified5/27/16)
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.
Western Growers Association
ARGUMENTS IN SUPPORT: 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 population
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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.
ARGUMENTS IN OPPOSITION: Opponents state that SB 358, 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 they believe that no employee should
be paid differently based upon any protected classification,
they 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.
Prepared by:Brandon Seto / L. & I.R. / (916) 651-1556
5/28/16 16:57:29
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