©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 175 California requires equal pay defendants to affirmatively demonstrate that any pay differences are based on one or more of a limited number of factors.222 The permitted reasons for differences in pay are: a seniority system, a merit system, a system that measures earnings by quantity or quality of production, and a bona fide factor other than sex such as education, experience, and training. Employers may rely on such a factor only if the employer proves the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a “business necessity” (i.e., the factor relied upon effectively fulfills the business purpose it is supposed to serve). Moreover, this defense will not apply if the plaintiff shows that an alternative business practice would serve the same business purpose without producing the pay differential.223 California, unlike federal law, has removed statutory exemptions that applied where work was performed “at different geographic locations” and “on different shifts or at different times of day.” Nonetheless, employers may still justify pay differences based on geographic location, shift, or hours differentials, as a bona fide factor other than sex.224 Expansion beyond gender. In 2016 the Legislature doubled down on the Equal Pay Act, extending California’s pay equity provisions beyond gender differentials to differentials among employees of different races or ethnicities.225 Ban on use of prior salary as sole basis to defend pay disparity. A 2015 amendment provided that employers must not use prior salary as the “sole” basis to justify a pay disparity.226 In 2018 the Legislature tightened this restriction, providing that prior salary cannot be used to justify any disparity in compensation.227 While employers still may cite rightfully obtained prior salary information, employers cannot rely on differences in prior pay to justify ongoing pay differences between substantially equal employees.228 Anti-secrecy provision. The Equal Pay Act, duplicating law found elsewhere, forbids employers from prohibiting employees from disclosing or discussing their own wages or the wages of others, or from aiding or encouraging other employees to exercise their rights under the law.229 These anti-pay secrecy requirements echo similar prohibitions emanating from the National Labor Relations Act, the California Labor Code, and an Executive Order that applies to federal contractors. Methods of enforcement. The DLSE can enforce the Equal Pay Act, and employees can sue directly in court— within two years from the date of the violation (or three if the violation was “willful”)—to recover the balance of wages, interest, liquidated damages, costs, and reasonable attorney fees.230 Employees also may file complaints with the DLSE alleging employer violations of the prohibitions on discrimination, retaliation, and restricting employee wage-information discussions.231 The Equal Pay Act law provides an additional private right of action— with a one-year statute of limitations—for employees claiming they have been discharged, discriminated, or retaliated against for engaging in any conduct protected by the statute.232 These employees may seek reinstatement and reimbursement for lost wages and benefits, interest, and “appropriate equitable relief.”233 Recordkeeping requirements. The Equal Pay Act has extended—from two years to three—an employer’s obligation to maintain records of wages and pay rates, job classifications, and other terms of employment.234
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