Today, October 6, 2015, Governor Brown signed into the law Senate Bill 358, directed at ensuring equal pay across genders.  While it was illegal to pay employees different wages based upon their gender or race already under California law, the new law expands the protection to workers who do “substantially similar” work.  The bill amends Labor Code section 1197.5.  If challenged, employers can justify different pay if the employer can show it is based on one or more of the following factors:

  1. A seniority system
  2. A merit system
  3. A system that measures earning by quantity or quality of production
  4. A bona fide factor other than sex, such as education, training, or experience.

The law also requires that employers maintain records of the wages and wage rates, job classifications, and “other terms and conditions of employment of the person employed by the employer” for three years.

The statute of limitations requires that a plaintiff bring a case no later than two years after the cause of action accrues, exempt that if the violation is “willful” a three years statute of limitations applies.

Employees who bring a lawsuit under the law can recover the balance of the wages, including interest thereon, and an equal amount as liquidated damages, costs of the suit and reasonable attorney’s fees, notwithstanding any agreement to work for a lesser wage.

The law also prohibits employers from restricting employees from disclosing their wages, discussing the wages of others, inquiring about another employee’s wages, or aiding or encouraging others to exercise their rights under the new law.  Current law already regulated employer’s ability to limit employee’s discussion of their wages and workplace environment.  For example, employers cannot prohibit employees from discussing or disclosing their wages, or for refusing to agree not to disclose their wages under Labor Code Sections 232(a) and (b). In addition, employers cannot require that an employee refrain from disclosing information about the employer’s working conditions, or require an employee to sign an agreement that restricts the employee from discussing their working conditions under Labor Code Section 232.5.

The new law becomes effective January 1, 2016.  Employers should consider the implications of this new law and how best to preserve evidence that documents and justifies the different rates of pay for employees.

This law, among other laws that California employers must comply with at the beginning of 2016 will be discussed during a webinar I’m conducting next month.  For more information about the webinar and to register, please email me.