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Amendments Address Prior Salary, Race, and Ethnicity

A new law in California, effective January 1, 2017, makes certain changes to the state’s equal pay law. Highlights of the changes are presented below.
Background
Currently, an employer is prohibited from paying any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates:
  • The wage differential is based upon certain factors (a seniority system; a merit system; a system that measures earnings by quantity or quality of production; or a bona fide factor other than sex, such as education, training, or experience);
  • Each factor relied upon is applied reasonably; and
  • The one or more factors relied upon account for the entire wage differential.
Amended Law
The amended law provides that an employer is prohibited from paying any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions—subject to the exceptions above.
Note: Under the amended law, the third bulleted exception above specifies that prior salary must not, by itself, justify any disparity in compensation. This requirement applies to both discrimination based on sex and race/ethnicity.
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