IAML's Executive Director, Bob Lee, discusses new 2016 employment laws for California's private sector employees with highly-popular faculty member, Gavin S. Appleby, Esq. of Littler Mendelson.
Bob Lee: "Hello and welcome. I am Bob Lee, the Executive Director of the Institute for Applied Management & Law and I'd like to welcome you to an IAML Alert. The topic is California pay equity law. The presenter is Gavin Appleby. Gavin Appleby has been teaching for the Institute for over 25 years and is a partner in the law firm of Littler Mendelson, headquartered out of the Atlanta Office. Gavin is the lead instructor for IAML programs from our Advanced Update in Employment Law to Workplace Decision Making to Investigations, and the Certificate in Employee Relations Law.
"This program is important for anyone who has California employees. Please listen closely for the issues that Gavin feels are important for you to address from pay equity, wage theft law, retaliation and others.
"Gavin, take it away."
Gavin Appleby: "I'll be happy to do that. Thank for the introduction Bob. And if everyone's wondering why a person who's based in Atlanta is dealing with California law, it's because I spend a considerable part of my life in California. I'm doing a lot of compliance stuff around the country and California, of course, is still part of the United States, but we sometimes wonder if the laws have gone into an alien country.
"Anyway, that's part of what we're doing here today. There have been a number of new laws passed in California. For those of you who live in California, you're probably aware [Governor] Jerry Brown has the option at the end of the legislative session to veto or not veto, he has a couple weeks to look over those laws and we have what we now have for the new year.
"The most major of those is the one that Bob mentioned, which is the California pay equity law. California, by the way, has had a pay equity law back to 1949, if I'm remembering correctly. And, to make a long story short, I think the perception is, at least by those in the legislature, that the old law wasn't getting it done and there may be some truth to that. I do a fair amount of litigation in California too and the reality is we don't see that claim made very often. Where the claim is made is usually on the basis like a straight forward sex discrimination or race discrimination type claim. So, the new law should be changing all that.
"It is very broad and let me give you, in a very small nutshell, what you should be aware of and what you should be looking for. The old law basically said simply this, which is that to have a differential pay based upon sex, that could happen as long as it was justified by a number of factors. The big issue in the old law, which is very similar to a federal law called the Equal Pay Act, is that you have to pay equal for equal work. California has now changed that and that's a big deal. We haven't gone as far as we almost went about 20 years ago to something called comparable worth, which was the issue whereas a nurse is as valuable to somebody as a scientist and therefore they should get the same pay even though not remotely anywhere the same job. We haven't gone that far at this point.
"What we have though has now changed the situation to the comparison is no longer equal pay for equal work. The comparison is equal pay for substantially similar work. With equal pay for equal work we were able to basically evaluate the same job and two people, one male and one female, within that job and at least you're working from an apple cart. Now, with the substantially similar language, where we're working from an apple versus oranges and perhaps even pineapples analysis because we're being asked not to just look at people within a particular job, but substantially similar can basically be a job versus another job versus maybe even another job. And, that view is going to create some very interesting pieces relative to this whole situation because once you get into this idea of substantially similar, what does that really mean? And how do we really define that? And the answer is, I don't think we know and I don't think the law tells us. What it does tell us that we have to look at a "composite of skill and effort and responsibility performed under similar working conditions." I guess those are relevant factors and I think they probably are relevant factors, but when you've got two similar jobs, you're going to have a little bit of difficulty evaluating what that means. Does that mean that Jill and Jose are really doing the same thing? Are they doing enough of the same thing? And frankly, we are probably looking at ten years of litigation before we know what the court is really going to say about that. The question becomes, are you going to be one of the test cases? And it is going to be interesting to see how they all play out.
"All of this is based on that analysis, which California said actually was in the law. The legislature talked about a differential of pay based on gender and they talked about women making only $.84 for a man who made a dollar. You probably heard a different figure, which is a national figure thrown out sometimes; $.77 or even $.71 versus a dollar. The problem with those broad comparisons is we're not just apples and oranges. We are talking about grapes and watermelons in there as well. Having said that, I do believe that there is a differential and I do believe that the differential is probably 10%, right along those lines anyway.
"So, I get the justification for the law. I think the question is going to be the generality of substantially similar work and you should be looking to determine how that might be measured. By the way, one way it is often measured in a company is to look at job grades because we do see different jobs fit the same grade. That may or may not be substantially equivalent work, but it may be one thing to look at. Secondly, it might be the tasks that people do. Third is the amount of responsibility that they have.
"You're going to look to see those issues. If you're going to look, I recommend you do it in an audit. I recommend you do that audit with attorney-client privilege so you don't have a potential disaster facing you if litigation occurs. I do a lot of those audits so does my law firm Littler Mendelson and if you have an interest obviously let us know, but that is probably the safest way to do it is under attorney-client privilege.
"One other piece to this law that you should be aware of that's also different; in the old law we talked about, within an establishment, now we have something that says there is no same establishment requirement and the worry about that is one that is a very, very big concern to me. And that is, are we now comparing Los Angeles with a small town in Northern California? That could get very interesting very quickly because we have always paid based on geography and the market. Everybody I know in the pay world does that. I will tell you that if we're looking beyond establishments and we're saying that people just have to be paid the same and we're not considering geography, that is a potential disaster for employers. I am hoping that the courts will understand that. I'm hoping that a bonafide factor other than sex also may include geography, but that is not in here very clearly.
"Two other things to state about the pay law and I will close that one up because I know that we have a short period of time here. One is you should also be aware that the law brings into practice something new which is basically a no pay secrecy policy and no pay secrecy requirements. That is really not new because the National Labor Relations Board is interpreting the National Labor Relations Act to do the same thing for about eight years now. Well, actually longer than that, but ultimately, the State of California decided they had to have their own law on that so they specifically have in this law that you can't make people keep their pay a secret. You have to let them discuss that with other people. I don't think most people have an issue with that any longer. I think most companies don't have any issue with that any longer, but it is part of the new law.
"And then finally, the new law has an element in it that deals with burdens of proof; and effectively what has now happened with the new law is that the burden for employers has gone up, but the burden for employees has gone down. That is going to play out in litigation at some point. The burden on employers now requires that the difference in compensation not be sex based and you have to specifically show that there is an element not based on gender that justifies the differential. It's got to be related to the position in question and there has to be a 'business necessity that caused the differential to occur.' That is a fairly high standard and even then, by the way, the employee with the much lower burden can say, 'Oh, by the way, there is an alternative way to pay people that exists or alternative analysis that could have applied here and if that alternative is less discriminatory, it should have been applied.' That is going to create a lot of confusion to the world's juries because that is a very difficult issue.
"In a nutshell, that's what we've got on that one. Be very careful. Like I said, I think it's worth looking at pay issues, looking to see how you are paying. I think the geography thing should concern you. Two factors moving forward; make sure as you're evaluating pay that you're looking for bonafide factors such as qualification, such as performance, such as seniority and two, you really ought to be thinking about the audit issues because that is the only way you're going to know if you're doing this right and please don't do an audit without privilege because that may be something that is going to appear in court against you.
"A couple other things California changed... there were numerous laws that came out. Most of them are relatively picky, relatively kind of nitpicky. There is change that occurred on the retaliation law that you ought to be aware of. It now links family members, so if an employee is retaliated against because of a family member's actions, that is not covered by the law. I'm not sure how important that is going to be.
"There's also kind of a weird one and this one was intended to overturn a court decision. The question became if someone requested accommodation either for religion or for reasons related to disabilities and that accommodation was not reasonable and therefore was turned down, even though the accommodation was unreasonable, you can't retaliate against the person for having made that request. Not sure that's a big issue either, but it is something to be aware of. It is a nuance that wasn't in the law before and I think as we go through the accommodation issue and how complicated that have become, you need to be aware that your managers not get stupid just because someone asked for something that they perceived to have been a stupid accommodation and I have seen that happen from time to time. So, that's the retaliation piece.
"Good news for employers and this is really very good news because we thought it was just going to not happen, and that is the legislature also passed a law that would have prohibited arbitration agreements for new employees coming in. California arbitration agreements have become a huge thing because of all the wage and hour class actions that were going on. We have an awful lot of clients that are sorting people out relative to arbitration agreements and the California legislature was about to completely dismantle that at least for new people coming in. It passed, but Governor Brown vetoed that as a job killer bill and that's a relief for everybody. You should be aware of that.
"And then finally, next year's always another year and maybe not too surprisingly, new bills are already piling up. They range from increasing the state minimum wage to further expanding some of the discrimination laws, but amazingly enough there's already ten laws projected to be coming before the legislature all dealing with marijuana. Very interestingly, they run from broadening medical marijuana to making marijuana legal and one would even preclude employers from drug testing for marijuana, which is a very interesting issue if you happen to be in the construction world or something like that. But, that's still to come. We will be talking at this point next year and seeing what came through and it could be very interesting.
"I hope this has been helpful. I appreciate the time you spent with me and thanks for checking in on the IAML website."
[These issues are in reference to: 1) Senate Bill SB 358; amends Labor Code section 1197.5. 2) AB 1509; amends Labor Code sections 98.6, 1102.5, 2810.3, and 6310; and 3) AB 987; amends Government Code section 12940]
[For additional information about these, and other new California laws, go to https://www.littler.com/publication-press/publication/legislative-el-ni%C3%B1o-california-new-2016-employment-laws-state%E2%80%99s