The California Fair Pay Act is a Basic and Necessary Step to Address Wage Discrimination

November 17, 2015

The California Fair Pay Act, authored by California State Senator Hannah-Beth Jackson, passed the state senate unanimously and was signed by Governor Jerry Brown in early October. The Act addresses wage discrimination between men and women and requires employers to justify differences in wages for employees who do similar work, using non-discriminatory qualities. The law strengthens the California Equal Pay Act of 1949 by allowing comparison of “substantially similar” work regardless of titles, and requires that employers have a valid reason (e.g. professional experience, education, seniority) for differences in pay. It also allows for open discussion of salaries in the workplace and protection from an employer’s retaliation. For some, this is the only way wage discrimination can be discovered.

As one might expect, the law has faced resistance from business interests. Sarah Ketterer published a piece in the Wall Street Journal titled “The Wage Gap Myth That Won’t Die.” Apart from boilerplate anti-regulation arguments, Ketterer casts doubt on the very existence of wage discrimination against women. She contends that if one takes into account that women on average work fewer hours per week and tend to work in different, lower paid occupations than men, the “gap” in pay disappears.

If this were the case, it would be expected that, in general, there would not be a difference between men’s and women’s pay within occupations. But looking at pay within occupations and adjusting for hours worked, there is still evidence of significant wage discrimination. Other studies of wage discrimination that take into account some of these criticisms also still find a gap. (It’s important to note that the gap for non-white women is even larger.) Ketterer has the right impulse to want to interpret the data correctly, although her conclusion, that the wage gap is a myth, is not substantiated.

Moreover, it’s not necessary to know exactly how big the wage gap is in order to recognize the need for the Fair Pay Act. Qualitative evidence of wage discrimination — for example, the experience of specific people and companies — is abundant. Lily Ledbetter’s story is well-known. She was paid substantially less than her male counterparts with equal or less seniority for much of her almost 20-year career at Goodyear. Unfortunately, Ledbetter did not get justice: the Supreme Court ruled against her because she did not file her claim within 180 days of her first paycheck, even though she did not realize that she was discriminated against until well after that date.

There are also examples of companies voluntarily performing reviews of salaries to ensure they don’t discriminate. Salesforce, a software company, sifted through the salaries of its workforce and adjusted salaries upward when they found unjustified differences in pay. In addition to fixing an injustice, it probably also makes Salesforce more attractive to potential workers, especially in an industry with rampant sexism. This illustrates another point. Making sure that a company doesn’t discriminate via wages is a beneficial and necessary process for its management to undertake.

Intentional or unintentional employment discrimination can occur at several points in an employee’s career, for example, during hiring and annual reviews. Thus it’s not only important to design these processes to prevent discrimination, but to verify that discrimination has not occurred after the fact. The California Fair Pay Act will encourage employers to conduct these simple audits if they are not already carrying them out. (Guidance already exists; see for example The National Law Review.) It’s unclear why Ketterer claims that these audits would represent a significant burden, especially since some employers view them as beneficial.

Claudia Goldin, an economist cited by Ketterer whose work is used to both support and oppose laws addressing wage discrimination, generally believes the California law is positive but for a different reason. As quoted in Fortune, Goldin argues that the law is “going to empower women, so that they know there is a law to support them” when they take steps to address perceived discrimination. This is another important point: the law will make women more aware of wage discrimination and give them support when addressing it. If Ledbetter had the protection of a law like California’s, she could more easily have taken action to address the pay discrimination she faced. Or her employer, Goodyear, would have been put on notice that it was discriminating against her and might have raised her pay. Ketterer contends that empowering women will result in many lawsuits, furthering burdening companies. However, lawsuits generally have personal, financial, and career consequences for employees who undertake them; it is unlikely that they will proliferate due to this law. And as companies start to comply with the law and see its benefits, the need for lawsuits will decline.

Ketterer’s other explanations for the pay gap — that some women leave the workforce due to family obligations or that women choose lower paid occupations — do not stand up to scrutiny. There is nothing natural about women assuming most caregiving responsibilities; indeed, equal pay guarantees may contribute to greater gender equality in the home. It’s unfair that the work women do is valued less than the work men do, even when the work they do is substantially similar. It doesn’t make sense that many women are discouraged from pursuing certain occupations at various points throughout their lives. It’s ridiculous that in the 21st century there are still major areas of the economy, like science, technology, and finance that are male-dominated and plagued by overt sexism.

In addressing the underlying causes of these injustices, it’s clear that American society and culture must change, in the way that we educate women, tolerate sexism in the workplace, and create a “glass ceiling” for women and consider only men as leaders.

The California Fair Pay Act can address the gender discrimination that we know is happening, and will start to lay the groundwork for dealing with broader and deeply entrenched discriminatory attitudes and behavior regarding not only gender but other characteristics like race, gender identity, and sexual orientation.

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