MCLE Self-Study: California’s Fair Pay Act

By Lara C. de Leon and Christopher Olmsted

Lara de Leon and Chris Olmsted are shareholders at Ogletree, Deakins, Nash, Smoak & Stewart. Ms. de Leon is co-chair of her firm’s Pay Equity Practice Group. She has extensive experience defending employers of all sizes in federal and state litigation and administrative claims. She also regularly advises, counsels and trains clients on a wide array of employment-related matters, including issues of pay equity. Chris Olmsted provides labor law compliance counseling to employers.

For the second time in as many years, the California State Legislature passed significant amendments to California’s Equal Pay Act (EPA), codified in California Labor Code § 1197.5. The amendments come amidst a developing national narrative that is focused on gender pay equity. In addition to increased federal regulation focused on pay transparency, states and localities around the country are enacting or updating their laws on pay equity, many of which have been on the books since the early- to mid-1900s.

The California EPA codifies the principle that an employee is entitled to equal pay for equal work, without regard to gender, and was amended in 2015 with the passage of Senate Bill 358 (SB 358), the California Fair Pay Act (FPA), which became effective on January 1, 2016. Later in 2016, the California Legislature further amended the law in two additional ways: (1) AB 1676 provided that prior salary cannot, by itself, be a "bona fide factor other than sex" justifying a pay disparity between employees of opposite genders; and (2) SB 1063 expanded the EPA to prohibit wage differentials based on race or ethnicity, in addition to gender.