California Chamber of Commerce-supported legislation that seeks to eliminate pay disparity based on gender won approval from an Assembly policy committee this week.
SB 358 (Jackson; D-Santa Barbara) specifies that employees who are similarly situated and performing substantially similar duties should be paid the same wage rate.
The bill strengthens a section of the Labor Code that precludes an employer from discriminating against an employee in pay on the basis of gender.
Section 1197.5 mandates that an employer shall provide equal pay for equal work, unless a bona fide factor other than gender justifies the differential.
In an effort to eliminate the risk of a stringent interpretation of this standard, SB 358 proposes to amend the section to specify that an employee shall not be paid less than another employee who is performing “substantially similar” job duties, unless a bona fide factor exists.
The CalChamber and other groups that worked with the author to make the legislation acceptable to employers believe the language in the bill will achieve the intent of the law and eliminate any employer from seeking to justify a wage differential through meaningless differences in job duties under the guise that such positions are not “equal.”
SB 358 also seeks to provide further clarity to the term “bona fide factor” under which an employer may provide differential pay for a legitimate business purpose, such as to compensate an employee who has more extensive training, education or experience.
The CalChamber and other supporters believe the clarification will help employers navigate their pay structure and avoid unnecessary litigation regarding what business purposes qualify as a bona fide factor.
The CalChamber believes that employees who are similarly situated and who generally perform the same duties or the same position should be compensated in the same manner, regardless of any protected classification, including gender.
In a letter printed in the Senate Journal at the author’s request, the author of SB 358 clarified that a “bona fide factor” for justifying a wage differential could be that work is performed at different geographic locations or on different shifts or at different times of day, so long as the employer can prove the factor is consistent with business necessity, as specified in the bill.
Before the CalChamber-sought amendments, SB 358 contained language that would have created unnecessary litigation and limited an employer’s ability to compensate employees for their skill, experience and education.
Among other changes, SB 358 sought to modify the term “equal work” to “comparable work”—a term that was considered, but rejected, at the federal level when the U.S. Equal Pay Act was enacted due to the significant controversy it created.
In opposing the previous version of the bill, the CalChamber pointed out that trying to determine “comparable” work for different job duties can be extremely subjective, leading to different interpretations and thus the potential for litigation.
In place of that subjective term, the CalChamber proposed the standard of “substantially similar” work, which is used under the Equal Pay Act and which California courts have applied.
Also of concern was SB 358’s proposed definition of the term “business necessity” that requires an employer to prove the disparity in compensation is “necessary to the safe and efficient operation of the business” and that “there is no alternative practice to the factor relied upon that would accomplish the business purpose.”
In the previous version of the bill, it was unclear how an employer could ever utilize one of the listed bona fide factors as a justification for wage disparity, as such factors are not likely “necessary” for the “safe” operation of the business. It also would have been extremely difficult and unlikely that an employer would ever be able to prove a negative, that no other alternative practice in the employer universe could be used to satisfy the same purpose, without a disparity in pay. Therefore, the prior version of the bill would have limited an employer’s ability to attract employees with higher education, training and skill to their workforce.
SB 358 passed the Assembly Labor and Employment Committee on June 24, 6-1:
Ayes: R. Hernández (D-West Covina), Chu (D-San Jose), Low (D-Campbell), McCarty (D-Sacramento), Patterson (R-Fresno), Thurmond (D-Richmond).
No: Harper (R-Huntington Beach).
SB 358 passed the Senate on May 26 with unanimous bipartisan support.