Pay Equity: Where California Has Gone, So Goes The Nation

Both the federal government and the state of California are renewing their focus on pay equity. Will workers know the difference?

In 2014, the average American woman working full-time in a year-round job earned $39,621. The average American man earned $50,383. That means that for every dollar that a man earns, a woman earns just 79 cents.

Granted, the pay equity gap is closing. The 1980s saw significant improvement, with the 1980 ratio of 60 percent — that is, women earning 60 cents for every dollar a man earns — moving up to almost 72 percent in 1990. Since then, though, progress has not been as impressive: In 2000, the difference was just a bit over 73 percent, climbing to 77 percent in 2010.

There is plenty of room for improvement, and both the federal government and the state of California are testing new ways to enforce existing pay equity laws. And the key is enforcement: The most recent federal budget provided for more investigators at the U.S. Department of Labor, and that easily translates into more aggressive enforcement.

The President Speaks!

The federal government has taken a few steps toward encouraging private companies to wipe out the pay difference. Any business that contracts with the government, for example, must provide pay data broken out by gender, race and ethnicity to ensure they are complying with federal pay equity laws.

In an effort to encourage private companies to improve their own pay equity ratios, President Barack Obama announced in early 2016 that he would expand the reporting requirement to private companies with more than 100 employees. The requirement will be in the form of a federal regulation, not a federal law, to be enforced by the Equal Employment Opportunity Commission.

California Is A Leader In Pay Equity

The state has done more than most states when it comes to pay equity. In fact, Congress passed the Equal Pay Act in 1963 — almost 15 years after California passed its own law. And the Legislature’s efforts have (pardon the pun) paid off: The American Association of University Women reports that the state’s earnings ratio is 84 percent, putting us in eighth place compared to the rest of the country (including the District of Columbia, which ranked first with a 90 percent ratio).

The Legislature took additional steps to strengthen the equal pay law last year. Effective Jan. 1, 2016, employers cannot pay men and women different wages for “substantially similar” work. There are exceptions for wages based on seniority, merit, or quantity or quality of production. There is also an exception if the wage differential is based on a “bona fide factor other than sex” that is related to the job and that meets a business necessity.

Businesses should note, too, that the new law has stepped up enforcement and penalties for violations, including discrimination and retaliation.

What Does This Mean To The Workers?

This is all good news for the workforce — especially because both the rule and the new law include stepped up enforcement. The data gathered by the federal government will also serve as guidance for companies that are setting or revising wage rates.

However, an employee who believes he or she is the victim of wage discrimination should not wait for the EEOC to notice or the state to investigate. If you are facing a situation like that, you should consider contacting a lawyer for help. A skilled employment law attorney like Daniel Feder of The Law Offices of Daniel Feder can help you determine the best course of action.