Business & Economy

California Fair Pay Act gets an update Jan. 1. What changes?

The State Capitol in Sacramento
The State Capitol in Sacramento
Craig Miller/KQED

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One of the toughest equal pay laws in the country is about to get tougher.

California's Fair Pay Act, which was signed in October of 2015, went into effect in 2016. It put the burden of proof on employers to show they weren’t discriminating against female workers, and it banned retaliation against employees who asked for equal pay after comparing salaries with colleagues.

Two new laws, which take effect Jan. 1, will go a bit further. AB-1676 bans companies from taking into account what an employee made before as the only reason for paying them a different salary. AB-1063 expands the Fair Pay Act to protect employees of color.

Employers have long been banned by federal and state law from paying women less, but a pay gap still exists. American women are paid, on average, just 79 cents for every dollar a man makes, while African American women get 60 cents and Latinas 55 cents for every dollar paid to white men, according to Census data compiled by the National Partnership for Women and Families.

In California, the gap is smaller; women who work full-time make 84 cents for every dollar men do.

The two new laws have kept companies – and especially employment lawyers like Christopher J. Banks, a partner at Morgan Lewis, very busy as they scramble to comply with the new regulations.

“The laws are going to have a broad impact on people and companies that may require compensation to level people out,” Banks told KPCC.

In other words, some employees may see raises in 2017, as companies realize they need to bump up some salaries to comply with state law. 

Banks recently co-wrote a white paper for his firm, advising companies on steps to take before 2017.

It reads in part: "Employers should revise their handbooks, policies, and harassment trainings accordingly and include pay differences between members of differing races and ethnicities who perform 'substantially similar work' at the same employer (regardless of location) among the pay differentials that they analyze when conducting any kind of pay-equity analysis."