At the end of the fiscal year and beginning of the new year, employers often give raises and bonuses. These pay adjustments are often made in the secrecy of annual reviews and Zoom one-on-ones that obscure any transparency into the process. Employees who ask questions are often told their questions violate policy, that wages are confidential, and are discouraged from pressing the issue.
When this happens, it’s important to know your rights under state and federal laws that protect your right to fair pay and to discuss your salary.
Why it Matters
There is still a gender wage gap in America. Women earn, on average, 82 cents for every dollar earned by men. The wage gap also extends across racial groups, with African-American men earning about 87 cents and Hispanic men earning 91 cents for every dollar earned by white men. This gap is even larger for African-American and Hispanic women.
To eliminate the wage gap, California passed the Equal Pay Act (EPA), which requires equal pay for equal work. At the end of the fiscal year and beginning of the new year, employers often give raises and bonuses, and employees ask us what the EPA means in practice. Here are answers to some common questions.
The Equal Pay Act Requires That You Are Paid The Same for “Substantially Similar” Work
The EPA prohibits unequal wages: “[a]n employer shall not pay any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work.” Lab. Code § 1197.5(b). This means that if you have the same job responsibilities as a man or an employee of another race, you cannot be paid less than that employee unless the employer can show that the wage gap is based on one of the four statutory exceptions (discussed below).
To decide what counts as “similar work,” a court would look at the actual work you do, even if you have different job titles. An employer is also not off the hook just because some male employees make the same or less than a female employee—in that case, the male employees making more than the female employee for the same work must meet the statutory exemptions or the company is still liable for the unequal wages.
So what are the statutory exemptions? The only legal justifications for unequal pay are pay systems based on (1) seniority, (2) merit, (3) quantity/quality of production, or (4) bona fide non-race-based factor, such as education training or experience. This “bona fide non-race-based factor” only applies if the pay difference is a “business necessity,” and only then if there is no other alternative business practice that meets the same goal. In short, it is often very difficult to meet any of the four exceptions.
Employers’ frequently-stated reasons for unequal pay—things we’ve heard include “we had to pay more to recruit him from a competitor,” or “the manager likes him”—are not legal justifications.
Is it Legal to Ask for Salary History?
No. In California, you cannot be asked about your past “compensation and benefits.” You also cannot be paid less because you made less at a previous job. Lab. Code § 1197.5(b)(3); Rizo v. Yonivo, No. 16-15372 (Feb. 27, 2020). This means that an employer cannot rely on the “market” rate for a position or a person’s prior wages (ether that of the lower paid or higher paid employee) as a justification to pay a lower wage now. This is because studies show that relying on past salaries just perpetuates the existing wage gap.
What Are Pay Secrecy Policies, and Are They Legal?
Pay secrecy policies, also called pay or salary confidentiality rules or “black box” compensation systems, prohibit employees from discussing their wages with other employees. Employers often claim that pay secrecy is needed to help “morale” or to “control” finances. But more often, pay secrecy policies are used to hide wage gaps.
Because of this, California has passed laws that provide employees with the right to discuss their wages. Your employer cannot prohibit you from sharing how much you make or asking other employees how much they make. If your employer is telling you to keep your wages secret, they’re breaking the law.
Federal law also protects employees’ right to discuss their wages. For instance, the NLRB has repeatedly found that pay secrecy policies violate employees’ free speech rights and their right to organize and discuss working conditions.
Can I Be Fired for Discussing My Wages?
No. Your employer cannot retaliate against you for exercising your right to equal wages. This means they cannot threaten to discharge, demote, suspend, or in any manner discriminate against you for exercising your right to equal wages, including talking about your wages.
Can I Sue for Being Underpaid?
Yes. When an employer pays you less than a peer of a different race or gender, you can bring a lawsuit to recover the amount of unpaid wages (the amount of the wage gap) plus a penalty in the same amount (so basically, you receive twice the wage gap as damages). You also have the right to recover legal fees spent trying to get your employer to pay your wages. Lab. Code § 1197.5(c). Finally, you may also have a claim for race or gender discrimination under general anti-discrimination laws, which provide additional damages (including the possibility of emotional distress or punitive damages).
If you’re not paid the same as workers of another race, gender, or ethnicity for performing substantially similar work, you can sue for violations of California’s Equal Pay Act.
Talk to an Experienced Equal Pay and Employment Lawyer
Every worker in California has the right to be paid the same as other workers of another sex or race performing the same job. If you’re being paid less for the same work, your employer is breaking the law and you may have a right to damages. We provide free consultations for all clients with potential Equal Pay Act claims. Contact our experienced employment lawyers today.