California Fair Pay Act
The California Pay Equity Task Force recently published guidance and approved resources for employer compliance with the state's equal-pay laws. While the documents don't provide official legal advice, they provide employers comprehensive and illustrative guidance that should be considered when evaluating their hiring and compensation practices.
The Task Force
Following enactment of California's Fair Pay Act in 2016, the California Commission on the Status of Women and Girls launched the Task Force. According to their website, the Task Force is a statewide, multi-stakeholder effort to engage diverse interests and facilitate meaningful discussion on recent legislative revisions to California law. Task Force members include employee- and employer-advocates, experts, policymakers, state legislators, the California Labor Commissioner, and the Director of the California Department of Fair Employment and Housing. The Task Force focuses on providing an overview of current California law and addresses key issues related to employees, unions, and employers alike.
The latest update from the Task Force follows an October 2017 acknowledgment from Governor Jerry Brown regarding “expected recommendations coming out of the Task Force [to] assist companies around the state with assessing their current wage practices.” Employers may be particularly interested in the resources and tools that provide a Step-by-Step Wage Rate Evaluation Template (geared toward assessing whether employees are performing substantially similar work) and Guidance for Employers on Starting Compensation.
Step-by-Step Wage Rate Evaluation Template for Employers
California law generally requires employers to pay the same wage rate to employees who perform substantially similar work. While determining whether employees are performing “substantially similar work” is a nuanced and employer- and position-specific process, the Task Force recommends that employers focus on the “overall job content and actual duties performed” to begin this assessment. Employers are also encouraged to begin by “group[ing] together those positions that require the same skill, effort and responsibility (when viewed as a composite) based on function (e.g., HR, Legal, Marketing, etc.) and role from entry level to VP (e.g., assistant, director, vice president).” The Task Force recommends that employers then ask a series of questions to ensure accuracy in grouping positions.
Guidance for Employers on Starting Compensation
The Task Force also provides an overview of California law pursuant to California's prohibition on requesting prior salary information under Labor Code section 432.3(e) and sets forth “suggested practices for employers in setting starting salaries.” Noting that each organization is different and that there is no single approach, the Guidance includes a number of factors employers may consider in developing a compensation philosophy to ensure employees are paid in a fair and nondiscriminatory manner. These considerations include rewarding employees for job performance and their contribution to the company, as well as gearing compensation toward employee-retention and motivation, market competitiveness, budget, and profitability.
Questions about California's Fair Pay Act?
An experienced California employment lawyer can quickly answer your questions about California's Fair Pay Act. To discuss this law, or any of California wage and hour laws, feel free to contact leading California employment lawyers at Kingsley & Kingsley. Call toll-free at (888) 500-8469 or click here to contact us via email.
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Employers may consider reviewing their hiring and compensation practices with these newly issued recommendations in mind. Employers should also continue to monitor legislative developments related to California's equal-pay law, which remains one of the most protective in the nation. As recently reported, the state recently enacted new legislation updating the prohibition on employers inquiring into applicant prior-salary information and the requirements for providing a pay scale for positions following an applicant's reasonable request.