New Equal Pay Act obligations

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The California Equal Pay Act took effect in 2016 to address disparities in pay based on gender. Now this law is seeing more changes for 2017. Effective January 1, 2017, the Equal Pay Act has been expanded to address pay disparities based on race and ethnicity as well. Accordingly, an employer must be able to prove that any pay differential between employees of different genders, races or ethnicities for substantially similar work is based on factors such as seniority, a merit system, pay based on quantity or quality of production or another bona fide factor such as education, training or experience. So employers should do an analysis of their pay practices and existing pay levels with assistance of their counsel.

The new law also states that an employee’s prior salary shall not, by itself, justify any disparity in compensation. This means that employers should not take an employee’s prior pay level into account in determining their pay. As such, employers may want to consider removing any questions regarding an applicant’s pay history from their employment applications. But as pay disparity issues can be very complex so we strongly advise you to consult with counsel for this analysis.

In Coffee Break episode 19, Chris and Jennifer explain changes to the Equal Pay Act that could impact your hiring and compensation practices.