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The California Fair Pay Act – What does it now include?

Published: July 27, 2017

In the United States, employers throughout the country had to deal with major transitions and changes in the year 2016. However, considering the employers in the state of California, this proved to be a year that demanded major preparation for the changes made to the California Fair Pay Act.

While many states throughout the U.S were working to level the field for equal pay and salary (through passing legislations), California had become one of the states that were added to the list immediately.

The Fair Pay Act of California had taken effect over a year ago in January 2016, however, the CFPA was amended on January 1, 2017. The amendment expanded the law in four major areas significantly. These key areas include pay transparency, enforcement, pay equity and record retention.

Let’s have a look at each one of them separately.

Pay Transparency

The particular area of the Fair Pay Act of California expands an existing law and creates more transparency in terms of pay secrecy. To explain it further, the employees of California are no longer prohibited from disclosing their wages. The employers can put no restriction on disclosure of such information. Moreover, employees are allowed to discuss pay matters openly and may encourage other employees to demand their rights.

Enforcement

In the enforcement area, the Fair Pay Act of California has additionally created a private right of the employees that claim to have been retaliated against or discharged etc. These employees can exercise their right of action for being engaged in conduct that is protected under the statute. Moreover, employees can also file a grievance with the Division of Labor Standard Enforcement – California, against subjected misconducts.

Pay Equity

This particular amendment holds the most significance among all. Under this law, employers can no longer hold on to the notion of equal work or equal pay. Instead, California has adopted a ‘similar work’ test for determining the jobs that can be compared and is decidedly very expansive.

Such an amendment allows courts and employees to compare the pay of employees who do similar work or make comparisons across job titles. Moreover, the pay differential is limited to only specific factors. These factors may include seniority systems, bona fide factors, merit systems and any other system that would measure earning by quality or quantity of production.

Record Retention

The amendments to the Fair Pay Act of California require all the employers to maintain adequate records. For retaining records, employers are required to keep records of pay rates, wages, classifications and some other useful records, related to terms of employment. The law requires employers to retain these records for 3 years to ensure compliance with the law.

It is the responsibility of each employer to fully comply with the state, and local and federal laws as discussed above. It is advised to always consult your legal counselor to get the complete insight of all such amendments and to make them effective within your organizational practices and policies, in order to avoid any legal disputes later on.

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