Salary Surveys – SB 358 Changes the Landscape

One of the more far-reaching California state laws affecting gender-based pay will become effective January 1, 2016. The CA Fair Pay Act (SB 358) expands current law to require employers to not only pay all employees fairly based on internal equity with similar jobs, but also will prohibit employers from paying any of its employees at wage rates less than those paid to employees of the opposite sex at other firms for substantially similar work, when skill, effort and responsible are considered.CA employers may demonstrate that pay differentials between sexes are based on a seniority system, merit system, a system that measures earnings by quantity or quality of production, or on any bona fide factors other than sex, such as education, training, or experience. However, those “bona fide factors” may only be used if the employer can show that the factor relied on is not based on or derived from a sex-based differential in compensation, is job-related, and is consistent with a business necessity.

As has been the law for many years, an employer may not prohibit any employee from disclosing his/her own wages. The new law also prohibits an employer from forbidding an employee from discussing the wages of others, inquiring about another employee’s wages, or aiding or encouraging any other employee to exercise his/her rights under the law. The law does not obligate an employee to discuss his/her wages.

There will be a lot of debate about how far and wide the wage discussion and external equity must be viewed. We suspect plaintiffs’ attorneys will have a heyday with this one.  In the meantime, consider conducting an initial review of your compensation program to ensure you are paying men and women on par when they are performing similar work in light of the new law.  As SB 358 comes into law it is recommended that salary surveys for market rates be reviewed for external equity.  Silvers HR offers salary survey data for many positions.

More information on the 2016 employment laws will be available to our retained clients along with employee handbook updates in December.

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