Assembly Bill No 1676 - PDF document

1 Assembly Bill No. 1676 Passed the Assemb
Assembly Bill No. 1676 Passed the Assembly August 29, 2016 Chief Clerk of the Assembly Passed the Senate August 23, 2016 Secretary of the Senate This bill was received by the Governor this dayof , 2016, at o'clock m . Private Secretary of the Governor CHAPTER An act to amend Section 1197.5 of the Labor Code, relating toemployers. legislative counsel � s digest AB 1676, Campos . Employers: wage discrimination. Existing law generally prohibits an employer from paying anemployee at wage rates less than the rates paid to employees ofthe opposite sex in the same establishment for equal work on jobsthe performance of which requires equal skill, effort, andresponsibility, and which are performed under similar workingconditions. Existing law establishes exceptions to that prohibition,including, among others, where the payment is made based on anybona ®de factor other than sex, such as education, training, orexperience. Existing law makes it a misdemeanor for an employeror other person acting either individually or as an of®cer, agent,or employee of another person to pay or cause to be paid to anyemployee a wage less than the rate paid to an employee of theopposite sex as required by these provisions, or who reduces thewages of any employee in order to comply with these provisions.Existing law also makes it a misdemeanor for an employer to refuseor neg

2 lect to comply with the above provisions
lect to comply with the above provisions of law. This bill would specify that prior salary cannot, by itself, justifyany disparity in compensation under the bona ®de factor exceptionto the above prohibition. By changing the de®nition of an existingcrime, this bill would impose a state-mandated local program. This bill would incorporate additional changes in Section 1197.5of the Labor Code proposed by SB 1063 that would becomeoperative only if SB 1063 and this bill are both chaptered andbecome effective on or before January 1, 2017, and this bill ischaptered last. The California Constitution requires the state to reimburse localagencies and school districts for certain costs mandated by thestate. Statutory provisions establish procedures for making thatreimbursement. This bill would provide that no reimbursement is required bythis act for a speci®ed reason. 95 Ð 2 Ð AB 1676 The people of the State of California do enact as follows: SECTION 1. The Legislature ®nds and declares all of the following: (a) �� Over the past decade, the wage gap has barely budged andwage disparities continue to persist. In 2015, the gender wage gapin California stood at 16 cents on the dollar. For women of color,wage inequality is much worse. African American women inCalifornia make just 63 cents and Hispanic women less than 43cents for every dollar white non-Hispanic me

3 n make. (b) �� The problematic pra
n make. (b) �� The problematic practices of seeking salary history fromjob applicants and relying on prior salary to set employees' payrates contribute to the gender wage gap by perpetuating wageinequalities across the occupational spectrum. Women are paidless than men in 99.6 percent of occupations and are more likelyto face ®nancial penalties for taking time out of the paid workforcedue to childbearing and family caregiving responsibilities. (c) �� When employers make salary decisions during the hiringprocess based on prospective employees' prior salaries or requirewomen to disclose their prior salaries during salary negotiations,women often end up at a sharp disadvantage and historical patternsof gender bias and discrimination repeat themselves, causingwomen to continue earning less than their male counterparts. (d) �� Government of®cials have recognized the discriminatoryimpact that prior salaries can have on women in the job market.In 2015, on Equal Pay Day, the Chair of the Equal EmploymentOpportunity Commission (EEOC) advised employers on importantsteps they could take to ensure equal pay for equal work, includingeliminating ªdiscriminatory pay gaps on the basis of prior salaryºand the 2005 EEOC Compliance Manual states that ª[p]rior salarycannot, by itself, justify a compensation disparity.º (e) �� In July of 2015, the acting

4 director of the federal Of®ce ofPersonne
director of the federal Of®ce ofPersonnel Management provided guidance on advancing payequality in the federal government, warning that reliance on salaryhistory ªcould potentially adversely affect a candidate who isreturning to the workplace after having taken extended time offfrom his or her career or for whom an existing rate of pay is notre¯ective of the candidate's current quali®cations or existing labormarket conditions.º 95 AB 1676 Ð 3 Ð (f) �� Courts also have warned against relying on salary historyand have stated that prior salary cannot, by itself, justify a wagedisparity. In Corning Glass Works v. Brennan, (1974) 417 U.S.188, the United States Supreme Court held that a pay differentialwhich ªar[ises] simply because men would not work at the lowrates paid women ... and re¯ect[s] a job market in which [theemployer] could pay women less than men for the same workº isnot based on a cognizable factor other than sex under the EqualPay Act (Public Law 88-38) (Id., at p. 205). More recently, in Rizov. Yovino, Fresno County Superintendent of Schools, United StatesDistrict Court, Eastern District of California, Case No.1:14-cv-0423-MJS, the district court denied summary judgmenton defendant's motion under the federal Equal Pay Act based onits ®nding that, ªa pay structure based exclusively on prior wagesis so inherently fraught with the risk Ð in

5 deed, here, the virtualcertainty Ð that
deed, here, the virtualcertainty Ð that it will perpetuate a discriminatory wage disparitybetween men and women that it cannot stand, even if motivatedby a legitimate non-discriminatory business purpose.º(Id., at p.16). The court went on to explain that,ªsay[ing] an otherwiseunjusti®ed pay differential between women and men performingequal work is based on a factor other than sex because it re¯ectshistorical market forces which value the equal work of one sexover the other perpetuates the market's sex-based subjectiveassumptions and stereotyped misconceptions Congress passed theEqual Pay Act to eradicate.º (Id., at p. 17). (g) �� This act will codify existing law with respect to the provisionstating that prior salary cannot, by itself, justify a wage differentialunder Section 1197.5 of the Labor Code. (h) �� This act will also help ensure that both employers andworkers are able to negotiate and set salaries based on therequirements, expectations, and quali®cations of the person andthe job in question, rather than on an individual's prior earnings,which may re¯ect widespread, longstanding, gender-based wagedisparities in the labor market. SEC. 2. Section 1197.5 of the Labor Code is amended to read: 1197.5. (a) �� An employer shall not pay any of its employeesat wage rates less than the rates paid to employees of the oppositesex for sub

6 stantially similar work, when viewed as
stantially similar work, when viewed as a composite ofskill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates: 95 Ð 4 Ð AB 1676 (1) �� The wage differential is based upon one or more of thefollowing factors: (A) �� A seniority system. (B) �� A merit system. (C) �� A system that measures earnings by quantity or quality ofproduction. (D) �� A bona ®de factor other than sex, such as education,training, or experience. This factor shall apply only if the employerdemonstrates that the factor is not based on or derived from asex-based differential in compensation, is job related with respectto the position in question, and is consistent with a businessnecessity. For purposes of this subparagraph, ªbusiness necessityºmeans an overriding legitimate business purpose such that thefactor relied upon effectively ful®lls the business purpose it issupposed to serve. This defense shall not apply if the employeedemonstrates that an alternative business practice exists that wouldserve the same business purpose without producing the wagedifferential. (2) �� Each factor relied upon is applied reasonably. (3) �� The one or more factors relied upon account for the entirewage differential. Prior salary shall not, by itself, justify anydisparity in compensation. (b) �&

7 #0; Any employer who violates subdivisio
#0; Any employer who violates subdivision (a) is liable to theemployee affected in the amount of the wages, and interest thereon,of which the employee is deprived by reason of the violation, andan additional equal amount as liquidated damages. (c) �� The Division of Labor Standards Enforcement shalladminister and enforce this section. If the division ®nds that anemployer has violated this section, it may supervise the paymentof wages and interest found to be due and unpaid to employeesunder subdivision (a). Acceptance of payment in full made by anemployer and approved by the division shall constitute a waiveron the part of the employee of the employee's cause of actionunder subdivision (g). (d) �� Every employer shall maintain records of the wages andwage rates, job classi®cations, and other terms and conditions ofemployment of the persons employed by the employer. All of therecords shall be kept on ®le for a period of three years. (e) �� Any employee may ®le a complaint with the division thatthe wages paid are less than the wages to which the employee is 95 AB 1676 Ð 5 Ð entitled under subdivision (a) or that the employer is in violationof subdivision (j). The complaint shall be investigated as providedin subdivision (b) of Section 98.7. The division shall keepcon®dential the name of any employee who submits to the divisiona complaint

8 regarding an alleged violation of subdiv
regarding an alleged violation of subdivision (a) or(j) until the division establishes the validity of the complaint, unlessthe division must abridge con®dentiality to investigate thecomplaint. The name of the complaining employee shall remaincon®dential if the complaint is withdrawn before the con®dentialityis abridged by the division. The division shall take all proceedingsnecessary to enforce the payment of any sums found to be due andunpaid to these employees. (f) �� The department or division may commence and prosecute,unless otherwise requested by the employee or affected group ofemployees, a civil action on behalf of the employee and on behalfof a similarly affected group of employees to recover unpaid wagesand liquidated damages under subdivision (a), and in addition shallbe entitled to recover costs of suit. The consent of any employeeto the bringing of any action shall constitute a waiver on the partof the employee of the employee's cause of action undersubdivision (g) unless the action is dismissed without prejudiceby the department or the division, except that the employee mayintervene in the suit or may initiate independent action if the suithas not been determined within 180 days from the date of the ®lingof the complaint. (g) �� Any employee receiving less than the wage to which theemployee is entitled under this section may recove

9 r in a civil actionthe balance of the wa
r in a civil actionthe balance of the wages, including interest thereon, and an equalamount as liquidated damages, together with the costs of the suitand reasonable attorney's fees, notwithstanding any agreement towork for a lesser wage. (h) �� A civil action to recover wages under subdivision (a) maybe commenced no later than two years after the cause of actionoccurs, except that a cause of action arising out of a willfulviolation may be commenced no later than three years after thecause of action occurs. (i) �� If an employee recovers amounts due the employee undersubdivision (b), and also ®les a complaint or brings an action undersubdivision (d) of Section 206 of Title 29 of the United StatesCode which results in an additional recovery under federal law for 95 Ð 6 Ð AB 1676 the same violation, the employee shall return to the employer theamounts recovered under subdivision (b), or the amounts recoveredunder federal law, whichever is less. (j) �� (1) �� An employer shall not discharge, or in any mannerdiscriminate or retaliate against, any employee by reason of anyaction taken by the employee to invoke or assist in any mannerthe enforcement of this section. An employer shall not prohibit anemployee from disclosing the employee's own wages, discussingthe wages of others, inquiring about another employee's wages,or aiding or encou

10 raging any other employee to exercise hi
raging any other employee to exercise his or herrights under this section. Nothing in this section creates anobligation to disclose wages. (2) �� Any employee who has been discharged, discriminated orretaliated against, in the terms and conditions of his or heremployment because the employee engaged in any conductdelineated in this section may recover in a civil action reinstatementand reimbursement for lost wages and work bene®ts caused bythe acts of the employer, including interest thereon, as well asappropriate equitable relief. (3) �� A civil action brought under this subdivision may becommenced no later than one year after the cause of action occurs. SEC. 2.5. Section 1197.5 of the Labor Code is amended toread: 1197.5. (a) �� An employer shall not pay any of its employeesat wage rates less than the rates paid to employees of the oppositesex for substantially similar work, when viewed as a composite ofskill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates: (1) �� The wage differential is based upon one or more of thefollowing factors: (A) �� A seniority system. (B) �� A merit system. (C) �� A system that measures earnings by quantity or quality ofproduction. (D) �� A bona ®de factor other than sex, such as education,training, or experi

11 ence. This factor shall apply only if th
ence. This factor shall apply only if the employerdemonstrates that the factor is not based on or derived from asex-based differential in compensation, is job related with respectto the position in question, and is consistent with a businessnecessity. For purposes of this subparagraph, ªbusiness necessityº 95 AB 1676 Ð 7 Ð means an overriding legitimate business purpose such that thefactor relied upon effectively ful®lls the business purpose it issupposed to serve. This defense shall not apply if the employeedemonstrates that an alternative business practice exists that wouldserve the same business purpose without producing the wagedifferential. (2) �� Each factor relied upon is applied reasonably. (3) �� The one or more factors relied upon account for the entirewage differential. Prior salary shall not, by itself, justify anydisparity in compensation. (b) �� An employer shall not pay any of its employees at wagerates less than the rates paid to employees of another race orethnicity for substantially similar work, when viewed as acomposite of skill, effort, and responsibility, and performed undersimilar working conditions, except where the employerdemonstrates: (1) �� The wage differential is based upon one or more of thefollowing factors: (A) �� A seniority system. (B) �� A merit system. (C) �� A system that mea

12 sures earnings by quantity or quality of
sures earnings by quantity or quality ofproduction. (D) �� A bona ®de factor other than race or ethnicity, such aseducation, training, or experience. This factor shall apply only ifthe employer demonstrates that the factor is not based on or derivedfrom a race- or ethnicity-based differential in compensation, is jobrelated with respect to the position in question, and is consistentwith a business necessity. For purposes of this subparagraph,ªbusiness necessityº means an overriding legitimate businesspurpose such that the factor relied upon effectively ful®lls thebusiness purpose it is supposed to serve. This defense shall notapply if the employee demonstrates that an alternative businesspractice exists that would serve the same business purpose withoutproducing the wage differential. (2) �� Each factor relied upon is applied reasonably. (3) �� The one or more factors relied upon account for the entirewage differential. Prior salary shall not, by itself, justify anydisparity in compensation. (c) �� Any employer who violates subdivision (a) or (b) is liableto the employee affected in the amount of the wages, and interest 95 Ð 8 Ð AB 1676 thereon, of which the employee is deprived by reason of theviolation, and an additional equal amount as liquidated damages. (d) �� The Division of Labor Standards Enforcement shalladminister a

13 nd enforce this section. If the division
nd enforce this section. If the division ®nds that anemployer has violated this section, it may supervise the paymentof wages and interest found to be due and unpaid to employeesunder subdivision (a) or (b). Acceptance of payment in full madeby an employer and approved by the division shall constitute awaiver on the part of the employee of the employee's cause ofaction under subdivision (h). (e) �� Every employer shall maintain records of the wages andwage rates, job classi®cations, and other terms and conditions ofemployment of the persons employed by the employer. All of therecords shall be kept on ®le for a period of three years. (f) �� Any employee may ®le a complaint with the division thatthe wages paid are less than the wages to which the employee isentitled under subdivision (a) or (b) or that the employer is inviolation of subdivision (k). The complaint shall be investigatedas provided in subdivision (b) of Section 98.7. The division shallkeep con®dential the name of any employee who submits to thedivision a complaint regarding an alleged violation of subdivision(a), (b), or (k) until the division establishes the validity of thecomplaint, unless the division must abridge con®dentiality toinvestigate the complaint. The name of the complaining employeeshall remain con®dential if the complaint is withdrawn before thecon®dentiality is abridge

14 d by the division. The division shall ta
d by the division. The division shall takeall proceedings necessary to enforce the payment of any sumsfound to be due and unpaid to these employees. (g) �� The department or division may commence and prosecute,unless otherwise requested by the employee or affected group ofemployees, a civil action on behalf of the employee and on behalfof a similarly affected group of employees to recover unpaid wagesand liquidated damages under subdivision (a) or (b), and in additionshall be entitled to recover costs of suit. The consent of anyemployee to the bringing of any action shall constitute a waiveron the part of the employee of the employee's cause of actionunder subdivision (h) unless the action is dismissed withoutprejudice by the department or the division, except that theemployee may intervene in the suit or may initiate independent 95 AB 1676 Ð 9 Ð action if the suit has not been determined within 180 days fromthe date of the ®ling of the complaint. (h) �� An employee receiving less than the wage to which theemployee is entitled under this section may recover in a civil actionthe balance of the wages, including interest thereon, and an equalamount as liquidated damages, together with the costs of the suitand reasonable attorney's fees, notwithstanding any agreement towork for a lesser wage. (i) �� A civil action to recover wages under sub

15 division (a) or (b)may be commenced no l
division (a) or (b)may be commenced no later than two years after the cause of actionoccurs, except that a cause of action arising out of a willfulviolation may be commenced no later than three years after thecause of action occurs. (j) �� If an employee recovers amounts due the employee undersubdivision (c), and also ®les a complaint or brings an action undersubdivision (d) of Section 206 of Title 29 of the United StatesCode which results in an additional recovery under federal law forthe same violation, the employee shall return to the employer theamounts recovered under subdivision (c), or the amounts recoveredunder federal law, whichever is less. (k) �� (1) �� An employer shall not discharge, or in any mannerdiscriminate or retaliate against, any employee by reason of anyaction taken by the employee to invoke or assist in any mannerthe enforcement of this section. An employer shall not prohibit anemployee from disclosing the employee's own wages, discussingthe wages of others, inquiring about another employee's wages,or aiding or encouraging any other employee to exercise his or herrights under this section. Nothing in this section creates anobligation to disclose wages. (2) �� Any employee who has been discharged, discriminated orretaliated against, in the terms and conditions of his or heremployment because the employee engaged

16 in any conductdelineated in this section
in any conductdelineated in this section may recover in a civil action reinstatementand reimbursement for lost wages and work bene®ts caused bythe acts of the employer, including interest thereon, as well asappropriate equitable relief. (3) �� A civil action brought under this subdivision may becommenced no later than one year after the cause of action occurs. SEC. 3. Section 2.5 of this bill incorporates amendments toSection 1197.5 of the Labor Code proposed by both this bill and 95 Ð 10 Ð AB 1676 Senate Bill 1063. It shall only become operative if (1) both billsare enacted and become effective on or before January 1, 2017,(2) each bill amends Section 1197.5 of the Labor Code, and (3)this bill is enacted after Senate Bill 1063, in which case Section 2 of this bill shall not become operative. SEC. 4. No reimbursement is required by this act pursuant toSection 6 of Article XIIIB of the California Constitution becausethe only costs that may be incurred by a local agency or schooldistrict will be incurred because this act creates a new crime orinfraction, eliminates a crime or infraction, or changes the penaltyfor a crime or infraction, within the meaning of Section 17556 ofthe Government Code, or changes the de®nition of a crime withinthe meaning of Section 6 of Article XIIIB of the California Constitution. 95 AB 1676 Ð 11 Ð Approved , 2016