It’s been 60 years since the Equal Pay Act and 75 years since California’s Equal Pay Act was enacted, and while the pay equity gap has narrowed between men and women, especially among younger workers, there is still a significant disparity in earnings. Median wages for women are only 81% of what men make for the same work. In California, men earn on average $59,577 per year compared to women at $46,176. The gap for women of color is even greater. Many high-profile companies are faced with wage gap lawsuits too including Activision Blizzard, Disney and SpaceX.
One reason the wage gap persists despite the legislation in place is that most laws around pay equity are new and there are limitations in the language at the federal level. There is also a lack of uniformity in state laws when it comes to enforcing equal pay protections. For context, California and federal law prohibits employers from discriminating against employees in pay of employees based on race, ethnicity or sex. Then in late 2015, California amended its Labor Code to prohibit employers from paying employees of different sex, race or ethnicity differently “for doing substantially similar work.” (Cal. Labor Code § 1197.5.) This unique statute is important because it: (1) requires employees to be paid the same for doing similar work, regardless of title; and (2) protects employees from retaliation for speaking to each other about their wages. In 2018, California banned all employers from asking about a candidate’s pay history, and in 2023, passed a pay transparency law requiring employers to include pay ranges in job postings.
This legislation is a step in the right direction but without complete pay transparency, we won’t make the headway we hope to see on closing the gap. It is difficult, if not impossible, for women to prove they are being paid less than their male counterparts, for doing the same or substantially similar work, if they are prohibited from obtaining pay information from their employer during a lawsuit or are subject to being fired if they ask their colleagues for their pay information. That is what is happening in many states because many states do not have pay transparency protections and employees can be fired for requesting information about their colleague’s pay. It’s evident that these pay transparency protections are helping employees in California enforce fair pay and equal pay laws.
I remain hopeful that the new legislation will begin to close the gap by requiring employers to post pay ranges and job descriptions, so employees know the range to request for pay. And, since employers cannot request “prior pay” as part of the evaluation of a candidate, the hope is that those who have historically been underpaid will not be continually underpaid at future jobs.
Here are some ideas for employers to improve pay equity.
Evaluate business practices
From an employer’s perspective, you might not be able to spot systemic patterns when it comes to pay. Consider hiring an outside perspective to conduct a pay analysis and to evaluate your pay amongst similar employees to see whether equity adjustments should be made. There could have been legitimate reasons that someone might not have been hired and paid the same as a coworker doing similar work initially, but once those discrepancies are identified, employers can make appropriate adjustments for their employees. Engaging in a pay equity analysis can certainly save employers from lawsuits down the road.
Develop inclusive initiatives
Many employers can foster an inclusive environment by creating more open communication policies between employers and employees. Often the lack of communication, or clear communication, can create a feeling of unfairness among employees. Employers who have clear policies on hiring, promotions, raises or discipline can promote a feeling of fairness. Employers who follow their own policies and take steps to demonstrate that commitment create a level playing field. Consider creating objective hiring processes with preset questions as a guide. If there is an application process, consider removing identifying information on the applications to review the applicants objectively before an interview. If you have a review process, consider creating objective goals and standards, and allowing employees to participate in the review. Creating and encouraging a mentorship program will not only foster relationships between employees, but can also help individuals navigate office politics and provide guidance on how they can best advocate for themselves.
Know your rights
California’s protections are a useful tool to ensure employers are paying their employees the same wages, regardless of sex, race or ethnicity. They are also useful tools for employees to know how to navigate the uncomfortable questions surrounding whether an employee is being paid for doing substantially similar work.
We all spend the majority of our days at our place of work and all of us have incentive to create the best work culture and environment to retain talented employees.
Deborah Dixon, Founding Partner of The Dixon Firm based in San Diego, focuses on employee gender discrimination and harassment actions, as well as class and mass actions relating to defective products and fraud. She frequently advises employers on best practices to avoid lawsuits and presents on the importance of inclusivity in the workplace. She can be reached at [email protected].
