— by Brenna Johnson

On January 1, 2016, California’s new Fair Pay Act became effective. This new law strengthens the state’s existing Equal Pay Act with the intent of eliminating the gender wage gap. In California, a woman working full-time earns an average of 84 cents to every dollar a man earns.

The requirements of the law:

  1. Employers have to pay employees equally for “substantially similar work,” even if they have different job titles and work locations.
  2. The burden of proof has shifted from the employee to the employer. An employee no longer has to prove a pay disparity is unlawful. Instead, employers have to demonstrate that pay disparities are justified.
  3. The act allows employees to inquire about the wages of other employees and to discuss their own wages.
  4. The Fair Pay Act also makes it easier for employees to sue for retaliation.

Employers should:

  1. Conduct an audit of job descriptions and compensation rates. Make sure you address all compensation, including bonuses and equity grants. Should you find pay differences between men and women, determine whether it’s based on seniority, merit, quantity, or quality or factors such as education, training, and experience. If not, adjust compensation.
  2. Document reasons for wage disparities between similar positions. Implement clear guidelines for setting compensation levels. Tie salary increases, bonuses, and other forms of compensation to objective criteria as much as possible.
  3. Modify employee handbooks to include provisions of the new Fair Pay Act. Be sure the handbook explains employees’ right to ask about their coworkers’ compensation without fear of retaliation or discrimination.
  4. Maintain records. Employers are now required to maintain records for three years.
  5. Educate management personnel on the Fair Pay Act. Knowledge will arm them to address questions, ensure compliance, and insulate the employer from liability.

brennajohnsonBrenna Johnson is an Employment Law Attorney, and Workplace Investigator. Brenna helps small businesses navigate California’s employment and labor laws, as well as helping employees whose rights have been violated in the workplace.