California employers could be scrambling this year to stay compliant with the state’s new fair pay law—the toughest in the country.
The California Fair Pay Act, which took effect on January 1, 2016, requires employers to offer men and women comparable pay for “substantially similar,” not equal, work. The distinction is at the heart of the new law, which replaces an older version passed in 1949. Men and women with similar responsibilities, but with different roles, can now challenge wage disparities.
Under the new law, employees are also able to openly discuss and compare salaries without fear of reprisal. The California Division of Labor Standards Enforcement (DLSE) is tasked with investigating claims relating to the new law. If contacted by the DLSE, employers will have to provide documentation that justifies any pay disparities. Permitted reasons include seniority and level of education, among others.
Some legal experts predict the law will usher in a banner year for litigation. As a precautionary measure, California employers should make it a priority to audit employee compensation and record-keeping practices related to pay changes.