On September 1, 2015, with bipartisan support and the approval of the California Chamber of Commerce, the California Senate unanimously passed SB 358 introduced by Senator Hannah-Beth Jackson (D-Santa Barbara) which would amend to strengthen Labor Code Section 1197.5. Section 1197.5 as it currently exists outlaws discrimination in wages on the basis of sex and provides for enforcement by the Division of Labor Standards Enforcement (DLSE) or private action. Existing Section 1197.5 requires equal pay “for equal work on jobs the performance of which requires equal skill, effort and responsibility…which are performed under similar working conditions” with certain stated exceptions (per a seniority system, merit system, system measuring earnings by quantity or quality of production, or “a differential based on any bona fide factor other than sex.”
Based upon express legislative finding that the 2014 “gender wage gap” in California was 16 cents on the dollar, amended Section 1197.5 would strengthen enforcement of pay equity by virtue of the following change, among others. (1) it would require pay equity for “substantially similar work, when viewed as a composite of skill, effort and responsibility;” (2) it would eliminate the requirement that the wage differential be within the same establishment; (3) would render stricter the exceptions by requiring they be job related and consistent with business necessity, applied reasonably and account for the entire wage differential, and; (4) would render unlawful any employer prohibition on an employee’s disclosing the employee’s own wages, discussing the wages of others, inquiring about another employee’s wages or “aiding or encouraging any other employee” to exercise rights under the statute.
Reportedly when signed by Governor Brown the bill will impose the strongest measures towards equal pay in the nation. Republicans have blocked the Paycheck Fairness Act in the federal Congress, which would ban salary secrecy and narrow what counts as a legitimate business justification for disparities. The federal Fair Pay Act, which would require equal pay for comparable work, while introduced nearly every session, has never garnered a vote.
While the California Chamber reported that the bill’s clarification of exceptions would help employers “navigate their pay structure” and “avoid unnecessary litigation,” the bill has been criticized as inviting litigation as to the meaning of “substantially similar.”