New Fair Pay requirements went in to effect in 2017 and state that an employer must pay the same for “substantially similar” work, when viewed as composite of skill, effort and responsibility.
The new regulations eliminated the prior standard of comparing work at the “same establishment.” Now employees can compare their pay to employees who do not perform same work or who are not employed in same position or location.
What is substantially similar work? According to the California Senate example:
- Female secretary’s primary duties – answer telephone, make copies, transmit correspondence
- Male assistant’s primary duties – answer telephone, transmit documents, perform light filing tasks
- “Plaintiff’s burden would be to show that the man and woman should be paid the same wages because, when viewed as a composite of skill, effort, and responsibility, they were performing substantially similar jobs.”
The key is to look beyond job titles, the similarities can be subtle, some other examples:
- Hotel housekeepers (mostly female) v. hotel custodians/janitors (mostly male)
- Female cafe workers preparing meals on behalf factory’s shop floor workers vs. male cooks who make lunches for senior managers
- Call center customer service reps vs. call center sales vs. call center support
What are the exceptions for when pay can be different?
- Seniority system
- Merit system
- System that measures earnings by quantity or quality of production
- Other bona fide (nondiscriminatory) factor consistent with business necessity as defined as an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve
- Local job markets can be a factor for differences
Who has the burden of Proof?
Employee’s must show different pay under new “substantially similar” work standard. The employer must demonstrate that the differences are legitimate and nondiscriminatory.
Beginning in 2018:
- Employers may not rely on the salary history of an applicant to make an offer or determine salary.
- Employers may not seek salary history of applicant.
- Employers must, upon reasonable request, provide the pay scale for a position to an applicant.
- Applicants may voluntarily and without prompting disclose salary history information.
- Employers are not prohibited from considering voluntarily disclosed salary history information in determining salary.
Best practices for employers to protect themselves:
- Update hiring processes
- Update employment applications
- Train interviewers to not ask for prior salary information
- Have pay scales available upon request
- Have a form available for applicants to sign to document a voluntary and unsolicited disclosure of salary information.
All employers should analyze the content of their jobs to identify substantially similar work and to identify disparities in compensation.
It is recommended that any analysis done be conducted with employment counsel so that the attorney-client privilege is maintained. A self-audit conducted without counsel will be subject to discovery in any litigation, and failure to correct problems will be dangerous.
Lauren Sims is the article author and the Director of Human Resources Consulting for eqHR Solutions.
Whenever you require professional Human Resources or Payroll guidance to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, contact us for a no obligation consultation. eqHR Solutions offers professional, tactical and strategic, human resources support, ADP payroll product implementation/training and payroll processing services for businesses throughout Southern California.