855 461 8808

Introduction to the California Pay Act

Posted on June 13, 2023

Introduction to the California Pay Act

The California Pay Act was introduced in 2016 as an extension of the California Equal Pay Act of 1949. This law is widely considered to be one of the most progressive gender pay equity legislation in the country and applies to all employers regardless of size. This act aims to help eliminate the longstanding gender wage gap and strengthen California’s commitment to achieving true gender pay equity. Here’s what you need to know about the California Pay Act, according to expert HR advisors:

What Does the California Pay Act Do?

The California Pay Act prohibits employers from paying some workers less than employees of the opposite sex “for substantially similar work” when viewed as a composite of skill, effort, and responsibility. It also guarantees equal pay for equal work on the basis of sex, race, and ethnicity. By contrast, the federal Equal Pay Act only prohibits sex-based pay discrimination.

Key Terms & Definitions

Equal Pay:

Equal pay means that two people performing substantially similar work should receive equal compensation, regardless of their gender or other protected characteristics such as race or ethnicity.

Gender Wage Gap:

The gender wage gap is a measure of how much more men earn than women for doing comparable jobs. In 2019, women earned 82 cents for every dollar earned by men in America according to data from the U.S. Bureau of Labor Statistics (BLS).


Discrimination occurs when an employer pays someone less than another employee for doing substantially similar work because they are a member of a protected class such as race or gender. This type of discrimination is illegal under both federal and state laws such as Title VII and the California Fair Employment and Housing Act (FEHA).

For more information or to speak to an expert HR advisor, contact eqHR Solutions.

Roadmap for Compliance with the California Pay Act

Businesses must take proactive steps to ensure compliance with this law in order to avoid potential legal repercussions and damage to their reputation and brand. Here are some actionable steps that companies can take to comply with the requirements of the California Pay Act:

1. Conduct an Internal Audit

Companies should conduct an internal audit or review their existing compensation practices policies to identify potential areas where they may not be compliant with state or federal laws regarding equal pay for equal work.

For a comprehensive HR assessment from an expert HR solutions and consultancy, visit our website.

2. Develop a Plan

Once any potential issues have been identified, businesses should develop a plan that outlines how they will address them to comply with applicable laws such as Title VII and FEHA. This plan should include specific goals, timelines, resources needed, etc. so that it can be monitored over time.

3. Implement New Policies

Companies should implement new policies related to compensation practices that promote fundamental fairness across all employees regardless of their protected characteristics, such as race or gender. These policies should include provisions related to job descriptions, salary ranges, performance reviews, promotions, etc. so that all employees are treated fairly when it comes to compensation decisions.

4. Monitor Progress

Businesses should monitor progress towards meeting their goals outlined in their compliance plan on an ongoing basis in order to ensure they remain compliant with applicable laws regarding equal pay for equal work overtime.

Benefits & Risks Associated With Compliance, According to HR Advisors

There are many benefits associated with complying with the requirements outlined by the California Pay Act including increased employee morale due to feeling valued at work; improved productivity due to feeling respected; better recruitment efforts due to having a positive reputation among potential candidates; reduced risk of litigation due to being compliant with applicable laws; and improved customer satisfaction due to having happy employees who feel like they are being treated fairly at work.

On the other hand, there are risks associated with non-compliance including potential legal repercussions such as fines or lawsuits; damage done to a company’s reputation and brand; decreased employee morale due to lack of trust between employer/employee; decreased productivity due to lack motivation among employees; difficulty recruiting top talent due negative perception among potential candidates; increased risk litigation due non-compliance with applicable laws; and decreased customer satisfaction due unhappy employees who feel like they are not being treated fairly at work.

Work with an Expert HR Advisor or Receive an HR Assessment

In conclusion, it is important for businesses operating in California to understand what is required under this law to take proactive steps towards compliance before any issues arise which could potentially lead them into legal trouble or damage their reputation/brand among customers/candidates/employees alike. By taking these steps now, businesses can reap many benefits while avoiding costly risks associated with non-compliance down the road.

eqHR provides expert HR solutions and consultancy for small and mid-size businesses. We can provide on-demand services as needed, or act as a long-term extension of your team to help build or strengthen your HR department from within. We can also assist with an HR compliance assessment to evaluate your current needs.

Contact us to speak with expert HR advisors.