What can you tell me about California’s new Fair Pay Act? Will Gwyneth Paltrow finally be paid as much as Robert Downey, Jr.?

Q:     Well, it’s the time of year when we learn which bills become laws and make it even harder to be an employer in California. I have heard quite a bit about this new Fair Pay Act regarding gender pay equality. What does “substantially similar” mean, and what impact will the newly signed Fair Pay Act have on employers?

A:     Well, we are about to find out…. We have famously heard from actress Gwyneth Paltrow about the “painful” wage gap,[1] and it seems her plight has not fallen on deaf ears. Earlier this week, the Governor signed into law what has been deemed the country’s most stringent law regulating gender-based wage disparities. California’s new Fair Pay Act (“the Act”) now requires that an employee be paid equal to any counterpart of the opposite sex who performs “substantially similar work,” rather than just equal work. This requirement applies even when the employees work at different sites or have different titles.

While the aim of the law is certainly commendable, the standard will be likely difficult to apply. This makes sense because the Act does not define “substantially similar work.” As a result, its meaning and potential impact remains unclear. What we do know is that, in theory, the Act will make it easier for employees to sue their employers if they feel they are undercompensated. It will also be more difficult for employers to prove that wage gaps are not discriminatory. The Act shifts the burden from employees to employer to demonstrate that the wage differential is determined by a system based on seniority, merit, education, experience or other measures of quality. Further, even if the employer succeeds in demonstrating a non-discriminatory reason, the aggrieved employee can argue that business could have been run differently to avoid said pay discrepancy.

Geoffrey DeBoskey, head of Sidley Austin’s Los Angeles labor and employment group, implied that the Act, while drafted with pure intentions, presents a risk of drawn out and costly litigation for employers, and ultimately, leaves it to “judges and juries” to “second-guess business decisions.”[2] In contrast, Cliff Palefsky, a San Francisco plaintiffs’ employment attorney with McGuinn, Hillsman & Palefsky, does not expect the Act to cause substantial increase in litigation. This is because, Palefsky said, most “gender-bias cases involve discriminatory promotion practices, rather than unfair pay.”

Whether the Act will cause new discrimination victims to flood the courthouse, or simply a trickle, is yet to be determined. Unfortunately, until “substantially similar” is clarified by the Legislature or interpreted by the Court, eager Californians will be left to wonder, “[w]ill Jennifer Lawrence get paid like Bradley Cooper?” [3]

In unrelated news, I am currently lobbying Sacramento for the Attorney’s Pay Equalization With Hollywood Movie Actress Gwyneth Paltrow Act – commonly referred to by its acronym as the APEWHMAGPA.

[1] http://www.harpersbazaar.com/celebrity/latest/news/a12496/gwenyth-paltrow-pay-gap/

[2] Marisa Kendall. “Employment Lawyers Brace for Fair Pay Act.” The Recorder [San Francisco] 6 Oct. 2015. Web.

[3] Daniel Miller, Meg James, and Amy Kaufman. “With the New Fair Pay Act, Will Jennifer Lawrence Get Paid as Much as Bradley Cooper?” Los Angeles Times. Los Angeles Times, 08 Oct. 2015. Web.

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