Mid-2017 Report for California Employees – What You Should Know About the Equal Pay Act, Drugs in the Workplace, and Transgender Protections

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Toward the end of 2015, California Governor Jerry Brown signed into law an amendment to the California Equal Pay Act (“CEPA”). This amendment, known as the California Fair Pay Act “SB358”, represents a monumental evolutionary step forward in the fight for pay equality. Whereas the CEPA, originally enacted in 1949, was essentially simply another version of the federal Fair Pay Act, SB358 fundamentally shifts the burden of proof from the employee to the employer. Replacing the requirement that equal pay be provided for “equal work”, SB358 requires equal pay be provided for “substantially similar work”.

What may, at first glance, appear to be little more than a semantic difference is actually a considerable change, as it removes employers’ abilities to hide behind nominal differences in job responsibilities, or work locations, as bona fide justifications for pay disparities. Specifically, employers must show that pay disparities are due entirely to one or more of the permissible business justifications: Seniority, Merit (i.e. performance), Quality or Quantity of Production, or Bona-Fide Occupational Factor Other than Gender/Ethnicity.

In contrast to the federal Title VII of the Civil Rights Act (“Title VII”) and California’s Fair Employment and Housing Act (“FEHA”), employees seeking redress from the court for pay discrimination do not need to prove that the employer intentionally acted in a discriminatory manner. Instead, the employee (Plaintiff) must demonstrate only that he or she was paid differently while performing a “substantially similar” job. For their part, employers (Defendants) cannot employ a defense that cites any reason other than the permissible business reasons listed; prior pay history, or, accidental/inadvertent pay disparities, will not shield an employer from an adverse verdict. Additionally, even if the employer can establish a Bona-Fide Factors Other than Gender/Ethnicity defense, an employee may still prevail if he or she can present evidence that the employer could have implemented an alternative business practice that would not have resulted in a pay disparity. Another boon for employees is that SB358 provides for triple damages so any financial harm would then be multiplied by three when the court assesses the recovery.

Real life examples of pay disparities abound as journalistic and public interest in the subject gathers momentum. A long-range gender compensation study conducted by the Healthcare Information and Management Systems Society, found, that over the period spanning from 2006 to 2015, female information technology workers were paid lower wages than their male colleagues . Though upsetting, it is, perhaps, not entirely unexpected to find such a result in a male dominated industry such as Information Technology. More surprisingly, in a recently published Journal of American Medical Association study, researchers found that there is a clear pay disparity between male and female registered nurses in this traditionally female-dominated profession. The study found that male registered nurses were paid more than their female counterparts in both different settings and specialties.    

Similar to other anti-discrimination laws, SB358 also includes an anti-retaliation provision which forbids employers from taking adverse action against employees who undertake efforts to understand their pay relative to others at their company. Specifically, the bill protects employees from retribution for discussing or disclosing pay information, or inquiring about their co-workers' pay. At its core, the new California Fair Pay Act is, perhaps, the most rigorous attempt made to date to legislate pay equity between genders, and ethnicities.

Other significant recent developments in California’s labor landscape include the passing of Proposition 64, also known as the Adult Use of Marijuana Act (“AUMA”). Notably, the passage of Proposition 64 in 2016 does not preclude California employers from maintaining drug-free workplaces, nor does it change the status of marijuana use under federal law. Further, California employers are not required to provide accommodations to employees who are using marijuana for medicinal purposes. In fact, Proposition 64 did not amend existing accommodations under FEHA, the Americans with Disabilities Act (“ADA”), or Title VII. As a result, employers may still conduct pre-employment drug tests and decline to offer employment to applicants who tested positive for THC, the active ingredient in marijuana.    

Another important legal issue facing California employees is related to the use of prescription drugs in the workplace. The Equal Employment Opportunity Commission (“EEOC”) reports a large increase in the number of employee complaints involving drug tests, accommodations and discrimination based on prescription drug use. One prominent case resulted in the court holding that Grane Healthcare, a company that provides administrative support to long term care facilities, violated the ADA by subjecting job applicants to unlawful pre-offer medical exams, and prescription-drug inquiries, prior to extending job offers to applicants. These seemingly innocuous “drug tests” were, in actuality, held to be illegal medical exams which collected and provided the company with personal medical information that exceeded what should have been collected as part of standard illegal drug use testing. The court went as far as ruling that even successful job applicants subjected to illegal pre-offer medical exams or prescription-drug use inquiries still had legitimate ADA claims because they suffered harm.

Additionally, California’s Fair Employment and Housing Commission promulgated amendments to FEHA regulations which increase safeguards for transgender employees. With an anticipated effective date of July 1, 2017, these amendments include ensuring California transgender employees have access to comparable, safe and adequate facilities , and, provide for these employees the use of the facility that corresponds to their gender identity. In addition, employers must honor employees’ privacy by providing them with locking toilet stalls, staggered schedules for showing, shower curtains and other accommodations. If an employer has single occupancy facilities, the signage on the facility must be gender-neutral. Finally, employers may no longer ask employees to indicate their gender, with only a few exceptions as follows: where disclosure of gender is (i) voluntary, (ii) required to meet an employer’s legal tracking obligation, or (iii) the employer has a Bona-Fide Occupational Qualification (“BFOQ”) defense. BFOQ applies when the employee’s gender impacts someone’s personal privacy such as a patient, prisoner, or traveler. This is because the employee’s responsibility may include observing someone in the nude, performing cavity searches, or carrying-out safety-pat downs. All in all, it has been a busy 2017, and we anticipate many more employment-related laws in the latter half of the year.

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