Does the California Fair Pay Act Go Far Enough?

While it has been technically illegal to pay women less than men for doing the same job since the Federal Equal Pay Act (EPA) of 1963, women still earn substantially less than men in the United States. According to the American Association of University Women (AAUW), in 2014, women in full-time positions earned 79 cents for every dollar paid to men—and the numbers only get worse for women of color and older women.

The California Fair Pay Act of 2015 is a huge step forward in closing the pay gap, which hovers around $.84 for every dollar in our state. But despite the progress, California still has work to do if we are going to lead the nation in reducing gender-based pay disparities.

The California Fair Pay Act was signed into law as of October 2015 to revisit how comparisons are made between jobs to determine whether they trigger a requirement to pay men and women equally. Instead of the traditional and narrowly defined “equal work” standard, the Act requires equal pay for men and women performing “substantially similar” work.

Under the “equal work” definition, men and women could be paid differently for performing similar functions under different job titles or performing similar functions in different offices controlled by the same employer. Thanks to California’s FPA, jobs that are “viewed as a composite of skill, effort, and responsibility,” require equal pay for men and women. The law puts the responsibility on employers to prove that any differences in pay are a result of a bona fide factor such as “a seniority system, a merit system, a system that measures earnings by quantity or quality of production” or similar, and that the relevant factor or combination of factors must clearly justify any differences in male and female employees’ pay.

Additionally, the FPA mandates that businesses can no longer destroy pay records after two years—they are now required to keep these records for at least three—and it explicitly prohibits employers from preventing or discouraging workers from discussing their pay rates. Both clauses make it easier for women to uncover and document discrepancies in pay rates within the statute of limitations. Unlike many labor laws that exempt smaller businesses from compliance, these rules apply to every employer.

But does the California Fair Pay Act go far enough? Indeed, it covers some of the issues described in the National Equal Pay Task Force’s 2013 report, including a prohibition on employer retaliation against employees for discussing wages and a requirement that employers prove any discrepancies in pay rates are related to legitimate business reasons and not gender.

However, there are critical missing pieces. First, the Act doesn’t consider jobs that are primarily staffed by women. When there are no male employees to compare against, the law cannot be applied—even if pay is unreasonably low compared to industry standards. Second, there is little support for smaller companies that have neither the experience nor the resources to effectively analyze company-wide pay rates and correct gender-based discrepancies. Larger companies usually have the resources, but more complex pay structures and job descriptions make analysis a nightmare.  Finally, the act does not deliver services directly to girls and women. For example, the Act could set aside funds to teach pay negotiation skills, which would be an effective tool in reducing gender-based pay differences.

The California Fair Pay Act is commendable in its tough stance on holding companies accountable for removing discriminatory differences in pay, and it appears that California will lead the nation in reducing the pay gap. With a little additional work, California could be the first state to eliminate the disparate pay between men and women altogether.