California Equal Pay Act: Guidance for Business Owners
Introduction
The California Equal Pay Act prohibits employers from paying employees at lower wage rates than those paid to employees of the opposite sex or a different race or ethnicity for substantially similar work. Employees who receive less than the wage to which they are entitled may bring a civil action to recover the balance, interest, and an equal amount as liquidated damages. Costs and attorney fees may also be awarded. Lab. Code § 1197.5(a), (b), (h).
What Constitutes a Violation?
A violation occurs if:
An employee receives less pay than one or more employees of the opposite sex, another race, or another ethnicity working for the same business;
The employee performs substantially similar work, considering the overall combination of skill, effort, and responsibility required;
The employees work under similar working conditions.
Lab. Code § 1197.5(a), (b).
How Claims Are Proven
The law does not require a showing of discriminatory intent. The plaintiff may use a single comparator or a group for comparison, although California courts have not expressly ruled that one comparator is always sufficient. Green v. Par Pools, Inc., 111 Cal. App. 4th 620, 622–25, 628–29 (Ct. App. 2003); Hall v. County of Los Angeles, 148 Cal. App. 4th 318, 324 (Ct. App. 2007).
Employer Defenses
If an employee demonstrates a pay difference for substantially similar work, the employer may defend with statutory exceptions or show the pay difference is justified by a bona fide factor other than sex, race, or ethnicity. Lab. Code § 1197.5(a)(1), (b)(1); Allen v. Staples, Inc., 84 Cal. App. 5th 188, 194 (Ct. App. 2022).
Principle
The Equal Pay Act codifies the principle that all employees are entitled to equal pay for equal work, regardless of gender, race, or ethnicity. Jones v. Tracy Sch. Dist., 27 Cal. 3d 99, 104 (Cal. 1980).
Practical Guidance for California Employers
Review pay practices to ensure employees performing substantially similar work are compensated equally.
When setting wages, consider the overall skill, effort, and responsibility required—not just job titles.
Keep records of compensation decisions, including legitimate business reasons for pay differences.
Be prepared to justify any pay disparities if challenged, relying only on lawful bona fide factors.
Know that claims may arise without any showing of discriminatory intent; focus on objective pay equality.
Bottom Line
California business owners should rigorously monitor wage practices and document all pay decisions to comply with the Equal Pay Act. Equal pay for equal work is a legal requirement—and violations can result in financial penalties and litigation.
Citations
Lab. Code § 1197.5; Jones v. Tracy Sch. Dist., 27 Cal. 3d 99 (Cal. 1980); Green v. Par Pools, Inc., 111 Cal. App. 4th 620 (Ct. App. 2003); Allen v. Staples, Inc., 84 Cal. App. 5th 188 (Ct. App. 2022); Hall v. County of Los Angeles, 148 Cal. App. 4th 318 (Ct. App. 2007).
