Equality for one, equality for all

Since its original enactment in 1949, the California Equal Pay Act has been a powerful tool for ensuring gender equality in the workplace, prohibiting pay disparities between male and female employees. (Labor Code Section 1197.5).

In 2017, the act was expanded to prohibit pay disparities between different ethnicities and/or races. To prevail under the Act, a plaintiff must prove by a preponderance of the evidence that they were paid less wages than those paid to an employee of the opposite sex or different race or ethnicity for performing "substantially similar work." The statute defines "substantially similar work as "a composite of skill, effort, and responsibility, and performed under similar working conditions."

Notable is the fact that the act does not require discriminatory animus on the part of the employer to prove that a discriminatory practice occurred. Green v. Par Pools, Inc., 111 Cal.App.4th 620, 622-625, 629 (2003). By omitting this requirement, the California Legislature has recognized that unequal pay between genders, ethnicities and races has been a systemic problem engrained in many workplace salary structures, even if it may not always arise out of overt and conscious bias. Once a plaintiff has met their burden, the burden of proof then shifts to the employer to show by a preponderance of the evidence that the pay disparity is a result of "other bona fide factors," such as: 1) a reasonably applied seniority system, 2) a reasonably applied merit system, 3) a reasonably applied seniority system, 4) a reasonably applied system that measures earnings by quantity or quality of production, and/or 5) a bona fide factor (other than sex, race, or ethnicity) such as education, training, or experience that is not based on or derived from a sex, race, or ethnicity-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. Further acknowledging that pay inequity is a systemic issue, as of 2017 the act explicitly forbids an employee from using prior salary as a justification for pay disparity.

In Allen v. Staples, Inc., plaintiff contended that she had met her prima facie burden of proof under the Equal Pay Act by establishing that she was paid less than a single male comparator who performed substantially similar work. Defendant countered by asserting that no published California case had held that a plaintiff could meet their burden of proof for a violation of the act using a single disparate comparator, and on average its company wide pay practices amounted to females being paid more than their male counterparts. The trial court agreed with defendant and granted summary judgment in its favor. On appeal, the Second Appellate District Court reversed the trial court's decision, holding that plaintiff's showing of a single disparate comparator is enough to establish plaintiff's burden of proof for violation of the act, and the fact that defendant may have maintained an otherwise acceptable company wide pay average overall did not obviate the fact that the plaintiff could prove unequal pay in this individualized, specific instance. The court further noted that questions of material fact remained on the issue of whether defendant could meet its shifted burden of proof on its "other bona fide factors" defense.

The Allen case is the first published case in California to expressly hold that a single comparator can be used to establish plaintiff's burden of proof in an Equal Pay Act case. While the holding in Allen is not yet included in the Directions for Use section of CACI No. 2740: Violation of Equal Pay Act - Essential Factual Elements, it shouldn't be long until that occurs. In the meantime, expect plaintiffs to request a special jury instruction reflecting the holding in Allen.

The Allen decision should send a message to employers that general practices and procedures to encourage equal pay, while important, are not necessarily enough to root out individual instances of pay inequity in the workplace. It requires employers to have a deeper, more precise, and more individualized understanding of its pay practices, rather than to simply adopt a "one size fits all" approach that leaves some individuals unprotected. Employers should take great care to regularly perform an individualized and detailed assessment of each of its positions by skill, effort, responsibility, and working conditions to evaluate whether any of its employees have been treated in violation of the act. This is especially the case given that effective Jan. 1, 2023, California law will usher in a new era of pay transparency by mandating that employers with more than a certain number of employees disclose pay scales in all job postings and submit pay data reports to the California Civil Rights Department revealing compensation paid to employees broken down by gender, race, and ethnicity. Senate Bill 1162.

With an unprecedented level of pay transparency on the horizon and the publishing of the Allen decision, California employers should be more motivated than ever to engage in a diligent, active and dynamic effort to root out each and every instance of unlawful pay inequity.