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Is your Management Team aware of the recent amendment to the California’s Fair Pay Act (CFPA?

Posted on February 21, 2017

California Assembly Bill 1676

Governor Jerry Brown recently signed California Assembly Bill 1676 into law. The new employment law bill prohibits employers from solely using an applicant’s salary history to justify wage disparity.

California AB 1676 amends California’s Fair Pay Act (CFPA) and says that salary history cannot justify a gender pay gap. There are a few limited exceptions, such as a seniority or a merit system, but otherwise, it states that a gender-related pay gap is presumed to be discriminatory. AB 1676 also significantly increases the criminal penalties for illegal pay scales.

The law stops short of prohibiting employers from asking about salary history during the hiring process, however, employers still need to tread carefully when making offers to candidates.  When prior salary is known, employers should ensure that the pay offered is equal to others in the same or similar position.

As a reminder, CFPA differs from the Federal Equal Pay Act in the following ways:

  • Broadens the bands of comparison of positions:
    • Federal: Pay must be equal among employees in the same position
    • California: Pay must be equal among “substantially similar” employees when viewed as a composite of skill, effort, and responsibility
  • Broadens the geography:
    • Federal: Pay must be equal among employees in the same position in the same location
    • California: Compares employees across locations
  • Employers in California must explain “entire wage differentials,” meaning total compensation, not just base pay.
  • Employers in California will also be on the hook for attorneys’ fees for prevailing plaintiffs.

Employers should develop the following best practices:

  • Require supervisors and managers, who make decisions about compensation, to document the reasons employees are paid what they are paid
  • Create job descriptions, detail the skill required and responsibility given
  • Document seniority, merit, quantity and/or quality of work
  • Train supervisors and managers about the new law.

Lauren Sims is the author and a Principal HR Consultant with eqHR Solutions.

Whenever you require Human Resources or Payroll advice or help to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, call us for a no obligation consultation.

eqHR Solutions provides tactical and strategic HR support, ADP payroll product training and payroll processing to all size businesses in Southern California.