The Equal Pay Act of 1963 is a federal law mandating that men and women must receive equal pay for equal work. For many years, the California Equal Pay Act has also prohibited employers from paying employees less than employees of the opposite sex for equal work. In 2015, Governor Brown signed the California Fair Pay Act, which expanded and strengthened the Equal Pay Act to prohibit employers from paying employees wage rates that are less than what it pays employees of the opposite sex, or of another race, or of another ethnicity for substantially similar work.

Despite these longstanding laws, many sources report that the gender pay gap still exists. More and more women are taking legal action against their employers if they believe they are not receiving the pay they are due.

All California employers must be aware of this growing movement, so they can avoid similar lawsuits that are already impacting even the largest companies in the U.S.

Disney is the most recent company facing a lawsuit

According to Fox Business, 10 female employees are pursuing a class-action lawsuit against the entertainment giant Disney. They filed their claims under the California Fair Pay Act. This act fortified California’s Equal Pay Act by:

  • Requiring employers to prove employees were paid differently through a “bona fide factor other than sex,”;
  • Enforcing the factors of pay equity on employers more heavily;
  • Prolonging the time requiring employers to maintain records of pay and wages; and
  • Stating employees must receive equal pay for “substantially similar work.”

Disney stated that they are committed to equitable pay. They are also attempting to prevent the class-action lawsuit, reporting that the 10 employees have individual cases. Regardless, the case has garnered a considerable amount of attention that could spell out consequences for Disney, no matter how the case turns out.

Employers must consider these factors to ensure equal pay

California employers have the power to proactively prevent a lawsuit, or at least minimize the risks a pay equity claim might pose to their business and reputation. Most of all, employers must ensure that an employee’s sex is not a determining factor in the pay they receive.

If faced with a claim, an employer may be able to show that the work is not substantially similar. According to the California Division of Labor Standards Enforcement, “substantially similar work” refers to work that is mostly similar in skill, effort, responsibility, and performed under similar working conditions. Skill refers to the experience, ability, education, and training required to perform the job. Effort refers to the amount of physical or mental exertion needed to perform the job. Responsibility refers to the degree of accountability or duties required in performing the job. Working conditions has been interpreted to mean the physical surroundings (temperature, fumes, ventilation) and hazards.

If the work performed by persons of opposite gender or different race is substantially similar, the employer may still be able to justify a difference in wage rate by proving the difference is due to:

  • seniority;
  • merit;
  • a system that measures production; and/or
  • a bona fide factor other than sex, race, or ethnicity

A “bona fide factor other than sex, race, or ethnicity” is one that is 1) not based on or derived from a sex-, race-, or ethnicity- based factor, 2) job related, and 3) consistent with a business necessity.  Examples include education, training and experience.

The Equal Employment Opportunity Commission (EEOC) lists factors that employers must review when setting pay levels, including:

  • The skill and experience required for the job;
  • The effort needed to complete the job duties;
  • The accountability and liability of the specific position; and
  • The physical conditions and hazards this position might involve.

Employers should consider the factors listed by both the EEOC and the California Fair Pay Act.

It might also be helpful for employers to conduct regular pay equity audits to ensure they adhere to California and federal labor laws to avoid a lawsuit.