SB 358 Helps Workers and Employers

Cross posted on Fox and Hounds Daily

The issue of gender equity in compensation has been a prominent topic at the Capitol this year, with the introduction of several bills addressing this issue. One of the premier bills that has received national attention is SB 358 by Senator Hannah-Beth Jackson, titled the “Fair Pay Act.” While the California Chamber of Commerce was initially opposed to SB 358, through the hard work and collaboration of Senator Jackson, her staff, and sponsors, CalChamber ultimately changed its position to Support. Here’s why.

Equal pay for equal work has been the law in California for decades. While SB 358 certainly strengthens this law, it also provides clarity on ambiguous provisions that will help California employers avoid costly litigation. First, the term “equal” has proven too rigid and in limited cases, created absurd results that have provided a false sense of security for employers to justify a wage differential. Some employers have actually interpreted the term “equal” to mean absolutely identical job duties and title, and pay men a higher wage than women on minor variations. This was never the intent of the law and certainly is not how the federal counterpart, Equal Pay Act, or similar anti-discrimination laws have been interpreted with regard to wage discrimination. SB 358 modifies the term “equal” to “substantially similar” in order to emphasize the intent and application of the law.

Second, SB 358 defines the term “bona fide factor” to provide further guidance to employers regarding the bases that can legitimately justify a wage differential such as education, training, and experience. While some have commented that SB 358 removed work performed on different shifts or in different establishments as a justification for a difference in pay, it did not. As specifically set forth in Senator Jackson’s letter to the Senate Daily Journal on May 26, 2015:

Although the introduced version of the bill listed “work is performed at different geographic locations” and “work is performed on different shifts or at different times of day” as statutory exceptions to the equal pay law that could be claimed by an employer in response to a complaint alleging a gender-based wage differential, the current version does not specifically list those factors because each of those factors may be a “bona fide factor,” as that factor is defined in this bill.  Accordingly, the amendments to this bill that strike “work is performed at different geographic locations” and “work is performed on different shifts or at different times of day” should not be construed as the Legislature’s intent to make those factors unavailable to an employer responding to an equal pay complaint.  Rather, the employer may claim a “bona fide factor,” that may be specifically described by the employer as work that is performed at different geographic locations or work that is performed on different shifts or at different times of day, so long as the employer can prove that the factor is consistent with business necessity, as specified in the bill.

Overall, SB 358 creates a fair balance between ensuring employees receive the same wages for the same work regardless of their gender, while also allowing an employer to continue to manage its workforce and determine appropriate wages for non-gender related reasons.

Staff Contact: Jennifer Barrera