A California Chamber of Commerce job killer bill that will encourage lawsuits against businesses and make hiring more burdensome will be heard in the Assembly Appropriations Committee in a couple of weeks.
The CalChamber is asking members to contact their state Assembly representative to oppose SB 1162. An easy-to-edit sample letter is available here.
The proposal, SB 1162 (Limón; D-Goleta), encourages litigation against employers based on the publication of broad, unreliable data collected by the state. It undermines employers’ ability to hire, imposes burdensome administrative and record keeping requirements, and subjects employers to a private right of action and penalties under the Private Attorneys General Act (PAGA).
The additional burdens and costs this proposal would create will limit an employer’s ability to offer higher wages and benefits to new or existing employees and discourage growth or expansion in California.
Reports Not Helpful, Will Only Facilitate Lawsuits
In 2020, SB 973 required all California employers with 100 or more employees to report pay data by sex, race, ethnicity, and job category to the California Department of Fair Employment and Housing (DEFH). The first year this information was reported was last year, 2021. The reports were modeled after the proposed federal EEO-1 form, and employers must categorize employees within 10 broad job categories and identify the number of employees that fall within 12 pay bands.
In responding to concerns about the usefulness of the reports, the Equal Employment Opportunity Commission (EEOC) explicitly stated that these reports are not useful for identifying disparities in pay between two similarly situated workers: “The EEOC does not intend or expect that this data will identify specific, similarly situated comparators or that it will establish pay discrimination as a legal matter. Therefore, it is not critical that each EEO-1 pay band include only the same or similar occupations.”
In a letter sent to legislators, the CalChamber explained that after only one year of this reporting requirement, SB 1162 seeks to publicize all of this data identifiable by individual companies and add average wages for each job category by race and gender under the pretense that it would reveal gender and race-based pay disparities.
The CalChamber pointed out that this data was never designed to show such disparities and that publicizing the data to target employers is a cynical and disingenuous manipulation of what the EEOC itself has acknowledged is not a reliable measure of pay disparities between similarly situated employees.
Indeed, these reports will surely be used to develop future legislation, the CalChamber warned. Just this year, there were several bills pending in the Legislature that would use this data as if it does in fact provide proof of discrimination. The bill also proposes adding a report in which employers must publicly identify any labor contractors that they contract with, again with the intent of criticizing employers who use contractors, which is not unlawful.
Similar to what is proposed in SB 1162, a 2017 bill, AB 1209 (Lorena Gonzalez; D-San Diego), would have required the publication of data from employers on mean wage differentials between male and female employees. In a Sacramento Business Journal article that year, a member of the plaintiff’s bar stated: “By posting this on the Secretary of State’s website, the government is basically giving us (plaintiff lawyers) the data we need to go in there and hammer companies.”
Governor Edmund G. Brown Jr. vetoed AB 1209 due to this exact concern about litigation, stating in his veto letter: “…it is unclear that the bill as written, given its ambiguous wording, will provide data that will meaningfully contribute to efforts to close the gender wage gap. Indeed, I am worried that this ambiguity could be exploited to encourage more litigation than pay equity.”
Private Right of Action, PAGA
In its letter, the CalChamber also pointed out that section two of SB 1162 contains a private right of action. Because it amends a section of the Labor Code, it also exposes employers to lawsuits under PAGA.
More significantly, one of the biggest issues with the overreach of PAGA is that a plaintiff need not show harm to bring a PAGA claim, the CalChamber explained. This means that any employee, even one who was not interested in the open job position, could bring a claim under PAGA for a violation of this section.
Action Needed
The CalChamber is asking members to contact their state Assembly representative to oppose SB 1162. An easy-to-edit sample letter is available here.
