Governor Jerry Brown Signs the California Fair Pay Act (CFPA) Into Law

The CFPA was signed into law on October 6, 2015 and may be read in its entirety here. It is a relatively short statute and an easy read.  The CFPA is an amendment to a prior statute written in 1949 and has many of the key features of the Federal Equal Pay Act of 1963 (EPA) and the Paycheck Fairness Act (PFA), a proposed statute that has been blocked in the US Senate on three previous occasions.  There are, however, differences between the EPA and PFA and CFPA, some obvious and some subtle.

As a starting point, the EPA, an amendment to the Fair Labor Standards Act, in its entirety, reads as follows:

No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such 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 such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor  than sex: Provided, that an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee (EEOC, 1997)

I have underlined three key terms/phrases above and I will get to each of them.

The CFPA significantly expands the EPA as it relates to which employees can be compared as well as the affirmative defenses that may be used by an employer to rebut a wage discrimination claim.  The CFPA states the following:

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, except where the employer demonstrates: (1) 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. This factor shall apply only if the employer demonstrates that the factor is not based on 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.

The CFPA significantly changed the existing EPA as follows:

  • The CFPA removed the “within any establishment” requirement so that a complainant does not have to compare his/her salary to a cohort within the same establishment. Essentially wage discrimination claims can be made across establishment.
  • The definition of “substantially similar work” significantly broadens the definition of pay discrimination in comparison to the EPAs definition of equal work.
  • The affirmative defense of “a differential based on any other factor than sex” has been changed to a “A bona fide factor other than sex” that has to be “job related with respect to the position in question, and is consistent with a business necessity.” It appears that California has adopted a Uniform Guidelines standard of validation when it comes to pay factors. The language used in the CFPA is the same as the language used in the aborted PFA and, in my opinion, goes well beyond “any factor other than sex.” Furthermore, the factor other than sex defense is the one commonly used in the EPA.

There are five additional points to note.  First, the prior California statutes referenced discrimination within individual establishments.  The CFPA broadens this term to include different establishments connected to the same central authority.  For example, there are many schools within a school district.  Although each may be conceived as a single establishment, the central authority is the county school administration.  Thus (for example), a second grade male teacher at one school is an appropriate comparator to a female second grade teach in another school within the same district.

Second, the statutes of limitation are longer in the CFPA than the EPA.  The EPA limit is generally 300 days for the EPA (except if the state does not have its own human rights commission).  In comparison, it is a full year for a retaliation claim within the context of a pay act claim, two full years for the pay act claim itself, and three full years for a charge of “willful violation.”

Third, the remedies are the same in the CFPA and EPA (backpay and liquidated damages for willful violations).  The PFA, had it passed, would have also added compensatory and punitive damages.

Fourth, the state re-emphasizes that it is legal to discuss the salaries of other workers and illegal for employers to ban employees from discussing each other’s salaries.

Fifth, multiple remedies from pendant claims (e.g., state CFPA claim combined with EPA and Title VII) are allowed as long as they do not duplicate each other.

Because states such as California and New York have been in the forefront of strengthening their EEO laws, employers and employees in other states should keep their eyes open for similar types of statutes in their respective states.

By Art Gutman, Ph.D., Professor, Florida Institute of Technology

 

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