Beginning this year, any employer who has employees on the payroll in California has an added workplace concern: Is there a pay disparity between men and women who do “substantially similar” work?
A new California fair-pay law, effective Jan. 1, applies to all employers who have workers in the state, regardless of where the company is based or how big it is. Some employers already have scrambled to review their pay data to find obvious imbalances. Most are wondering and waiting for legal challenges to find out what “substantially similar” means.
The law’s goal — to eliminate traditional pay gaps between men and women — puts teeth into the kind of intentions reflected last month when Missouri Gov. Jay Nixon signed an executive order requiring Missouri agencies under his control to find and fix any gender pay imbalances.
The California law goes further, reaching into the private sector and requiring employers to pay back wages plus interest and damages if found to violate the law.
First, of course, employees need to know what fellow workers make in order to make a case for unfair pay. That’s why the California law also prohibits employers from punishing employees who discuss their pay with fellow workers. It doesn’t, however, require employers to reveal compensation.
The state’s no-retaliation rule harkens back to the Lilly Ledbetter case, which resulted in the first bill signed into law by President Barack Obama. The Lilly Ledbetter Fair Pay Restoration Act of 2009 expanded the time in which workers can file pay discrimination claims. Ledbetter had worked her entire career before being tipped off by a former co-worker that she had been paid far less than her male peers. The U.S. Supreme Court had ruled that it was too late for her to sue.
Effective last January, the U.S. Department of Labor implemented rules that said federal contractors or subcontractors can’t fire, discipline or discriminate against employees who ask about or disclose their own pay or that of others. Still, even if people know what co-workers earn, a big challenge remains to define jobs that would be considered similar.
“My advice to employers is to make sure that their job descriptions are accurate,” said James McDonald, managing partner of the Fisher & Phillips law office in Irvine, Calif. “It’s the content of the job, not the title that’s important. … Then make a pay comparison across gender.”
McDonald advises his employer clients to understand the defensible reasons for pay differentials, such as education levels, job seniority, total work experience or merit pay systems, to be able to explain pay gaps beyond gender difference.
Employers — and society at large — have long wrestled with evaluating the worth of jobs. Historically, “pink collar” jobs dominated by women have paid less than blue-collar jobs dominated by men. Historically, too, women have been the dominant family caregivers, often taking time off from work during what could be their prime professional advancement years.
“This law broadens the test of what the same or similar work is,” McDonald said.
The new rule in California, sometimes a bellwether state for changes in workplace law, affects only employees in that state, but employment law attorneys agree that it puts employers everywhere on notice about becoming more aware of gender-related compensation imbalance.