Protect Your Business from a Pay-Discrimination Lawsuit with Employment Practices Liability Insurance by Floyd Arthur

In October 2015, Gov. Jerry Brown of California signed one of the strongest anti-discrimination laws in the United States. Titled the California Fair Pay Act, the statute addresses the persistent and pervasive salary gap between men and women that exists both in California and nationwide.



Title VII of the Civil Rights Act of 1964 prohibits discrimination based on race, color, religion, sex or national origin, and this includes discrimination in pay. Nevertheless, data from 2014 shows that women in California are paid substantially less than men—earning an average 84 cents for every dollar men make. (That number is 78 cents on the dollar nationwide.) That gap is even larger for California’s Latina women, who earn about 44 cents for every dollar that white men make. In all, full-time female employees in the state earn about $34 billion less each year than males.

Changing the Rules on Pay Discrimination

Historically, the courts have viewed gender discrimination pay disputes in very narrow terms. As a rule, women can sue for pay disparities only if they are paid less than similarly qualified male employees who have the same job title and perform the exact same job. Thus, a female housekeeper who cleans rooms in a hotel cannot claim discrimination if a male janitor who cleans the hotel lobby is paid more than she.

Additionally, the courts have not mandated that male and female employees who work for the same company in different locations be paid equally. Thus, a female nurse who works for a large hospital chain can be paid less than a male nurse who performs the same job duties in a hospital 5 miles away. (According to a recent report in the Journal of the American Medical Association, female nurses in the United States are paid an average $11,000 per year less than their male counterparts.)

By contrast, the new statute, which received strong bipartisan support, specifies that men and women must be paid equally for “substantially similar” work.  Said the bill’s author, Sen. Hannah-Beth Jackson (D-Santa Barbara), “Now they’re going to have to value the work equally.”

The law also expressly prohibits employer retaliation against employees who discuss or request information about the wages of other employees.


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