State of California tightens equal pay regulations

Similar to the Massachusetts Pay Equity law passed earlier this year, California Governor Jerry Brown signed an additional anti-wage discrimination bill on Sept. 30th that bans using prior salary as a baseline for setting compensation. This law further strengthens the already stringent pay equity laws in California. Specifically, the law now states that employers cannot justify a disparity in compensation solely based on candidates’ prior salary.

The law states that employees performing “substantially similar work, when viewed as a composite of skill, effort, responsibility, and working conditions” must be paid equally. Any differences in wage can only be justified by the following factors:

  • A seniority system
  • A merit system
  • A system that measures earnings by quantity or quality of production
  • A bona fide factor other than sex, such as education, training, or experience

California’s law also aims at closing the wage gap regarding race and ethnicity. The law uses the same clause above to prevent employers from discriminating on the basis of race as well as gender.

The idea behind these laws is to eradicate prevailing unfair wage disparities in the market that get carried over when employers set compensation based on prior salary. According to the sponsors of the bill, many statistics on the wage gap between men and women have revealed the disparity (i.e. women earn 79 cents to every dollar men earn), and this wage gap is further widened when race is added to the equation (i.e. black women earn 63 cents to every dollar white men earn; and Latinas earn 56 cents to every dollar white men earn).

This law will go into effect January 1st 2017. Click here to learn more about the bill.

By Rachel Monroe, HR Analyst, and Vinaya Sakpal, HR Analyst, DCI Consulting Group 

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