California Fair Pay Act Confusion – Understanding California Labor Code Section 1197.5

The following discussion concerns the California Fair Pay Act, and how to apply it. If you are unfamiliar with the Act, you may wish to begin by reading this blog.

I get calls from employers asking: “When I group my employees by substantial similarity of work, how do I know that I am doing it correctly?” These employers fear that someone – a Court, a plaintiff, or an employee – will come along and challenge the employer’s determination of who among its employees are engaged in “substantially similar” work.

The statute affirmatively requires employers to engage in that grouping. Unlike earlier equal pay act legislation, California’s Fair Pay Act puts the burden of proving compliance with the statute on the employer. Many employers are understandably concerned that their categorization of employees into groups of “substantial similarity” will be subject to criticism and attack.

The statutory language itself provides some relief to this anxiety. The section says:

(a) An employer shall not pay 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 …”

Although a lot can be said about what follows section (a), the first step of the analysis required by the statute requires grouping of workers into groups of substantially similar work. The statute requires the employer to view the work performed by its employees as “a composite of skill, effort and responsibility, and performed under similar working conditions ….” The statute stays, “when viewed as a composite…”. It doesn’t say “a composite as defined by law” or “a composite as approved by the Court,” or “a composite as determined by the administrator” …. Instead, it simply says that the employer is required to view the substantially similar work of its workers as “a” composite of skill, effort and responsibility. And while this may seem like a lot to place on a single article, “a,” the use of the article can be fairly read as expressing the legislature’s intent. The legislature is requiring employers to view the workforce or the positions performed by its workforce as a composite of the listed attributes.

Suppose we can read into that phrase the duty to make the composite reasonable and based upon an honest and fair assessment of the skill, effort and responsibility required to perform the work. The logical conclusion from that language, is that if the employer does the analysis required by the statute reasonably, that composite should be viewed by a court as dispositive, or at least as persuasive. Although there are no published cases under this statute as of this writing, this statutory language would support, in my view, a forceful argument that the employer gets to define a reasonable composite of skill, effort and responsibility and, that composite must be viewed favorably by courts as determinative of “substantial similarity “ of the work involved.