California Employers Must Pay Employees Equally – New Law to Go into Effect January 2, 2016

A new law signed into effect last week requires that California employers ensure that it pay men and women equal wages.  What does this mean?  It means that if two people have “substantially similar work”, their wages must be the same, even if their titles are different and they work at different sites. It also means that if an employee of one gender claims unequal wages, then a company will have to prove that the wage difference is due to factors other than sex, merit or seniority, is related and is not due to discrimination.  In other words, your company is going to have to justify pay rate decisions.

You only have one month to ensure compliance with this law.  Litigation will surely follow; so don’t wait to address your obligations. Damages will include the difference between the pay inequalities.

Recommendations for immediate compliance?  In order, here is what I suggest you should do:

  1. Determine whether you are paying men and women equal wages.
  2. Act on your findings: if you are not paying them equally for the same work, then make adjustments to pay them equally, immediately.
  3. Create protocols for monitoring wage determinations and payments to ensure that you are paying employees equally going forward.
  4. Institute regular employee performance reviews and adjust wages accordingly. Monitor performance so that if your wage determinates are performance related you have proof to support those decisions.
  5. When confronted by an employee about wage equality, conduct a review and consult counsel about how to respond.
  6. Hiring decisions must be carefully monitored so that you ensure that you do not violate this new law.
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Roger Royse

Roger Royse, the founder of the Royse Law Firm, works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger regularly advises on complex tax structuring, high stakes business negotiations and large international financial transactions. Practicing business and tax law since 1984, Roger’s background includes work with prominent San Francisco Bay area law firms, as well as Milbank, Tweed, Hadley and McCloy in New York City.
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