SACRAMENTO, Calif. (KEYT) - On Wednesday, legislation to expand California's equal pay laws was signed into law by Governor Newsom on the tenth anniversary of the California Fair Pay Act.
SB 642, also known as the Pay Equity Enforcement Act and authored by State Senator Limón, raises the the statute of limitations for wage claims up to six years, matching other wage-focused statutes in the state.
"With many families continuing to stretch to make ends meet, we reinforce our commitment to equal pay laws that strengthen the economic security of California families and communities," said Senator Monique Limón. "The Pay Equity Enforcement Act will help narrow the wage gap by providing workers with more negotiation power at the start of their career, while also strengthening workers' rights to recover lost wages - this is a win for workers and an even bigger win for California families."
According to the California Assembly's Appropriations Committee, the bill would incur, "Costs of approximately $213,000 in the first year and $201,000 annually thereafter to the Labor Commissioner to investigate additional or expanded equal pay complaints and initiate related civil actions on behalf of affected employees to recover unpaid wages and liquidated damages" as well as potentially long-term costs for the state as an employer and courts to process claims that otherwise would not be filed.
The new law also updates how pay scales are defined in labor laws in the state by requiring a good-faith estimate of the salary or hourly wages that employers expect to pay.
"[SB 642] modifies the definition of 'pay scale' to require a good faith estimate of expected pay upon hire," noted the Valley Industry and Commerce Association (VICA), a San Fernando Valley-focused business advocacy group. "While VICA supports transparency in hiring practices, this expanded definition would place further administrative burdens on employers, particularly small and mid-sized businesses that do not have the resources to precisely forecast wage ranges for every posted position. Additionally, employers are already required to maintain extensive wage and job history records under existing law, and SB 642 would create additional compliance risks with minimal evidence of improved outcomes for workers."
The pay scale changes in the new law are intended to improve the understanding of potential employees regarding the pay they can expect and a range to negotiate over explained Senator Limón's office in a press release Thursday.
"One of the biggest barriers to advancing pay equity is that workers often don't know that they are being paid unfairly until it is too late," stated Mariko Yoshihara, Policy Director for the California Employment Lawyers Association. "We applaud Governor Newsom for signing SB 642, which will comprehensively strengthen our equal pay laws and extend the ability to recover lost wages due to pay discrimination."
The legislation was signed into law during celebrations of Latina Equal Pay Day and part of the state's broader equal pay policy focus aiming to narrow the pay gap between men and women, especially amongst communities that show the largest gaps in pay.
"Latina women give so much of themselves to this state, to their families, their work, and our communities. California's story is one of perseverance and progress, written in large part by Latina women whose labor has fueled our economy and enriched our culture," noted First Partner Jennifer Siebel Newsom. "Yet they continue to earn far less than their peers for the same work. True equity means rewriting that story - one where every woman is paid fairly and can share fully in California's promise."
On average, Latinas are paid 46 percent less than white men and 26 percent less than white women.
According to the Public Policy Institute of California, Latinas are overrepresented in some of the lowest paying industries and even Latinas who do earn a bachelor's degree make on average 31 percent less than white men.
In fact, a notable gap in pay for Latinas is found at every education level shows the graph below courtesy of the Public Policy Institute of California.
The California Fair Pay Act, passed in 2015 and authored by State Senator Hannah-Beth Jackson, prohibited employers from paying any employees less than those doing "substantially similar work" and revised existing wage differential exemptions while extending record keeping requirements from two to three years.
Since its passage, further changes have been made to the state's equal pay legislation almost annually including the addition of race and ethnicity as protected categories beginning in 2017 as well as the passage of SB 973 in 2019 which required businesses with more than 100 employees to submit pay data reports to the state's Department of Fair Employment and Housing.
Those reports were not made public until the passage of SB 1162, authored by Senator Limón, in 2022.
"Transparency is key if we want to close the gender and race wage gaps, which still persist in nearly every industry and occupation in this country. Providing salary ranges on job postings empowers women and other workers with information they need to make the best decisions for their families and negotiate for the income they deserve," explained Jessica Ramey Stender, Policy Director & Deputy Legal Director at Equal Rights Advocates. "California has led the nation on equal pay protections and this bill [SB 1162] is the next logical step to continue that progress and keep forging a path for other states to follow."
Those updates have routinely expanded the grounds for legal claims of allegedly unfair wages by employees, but state law allows employers to contest those claims by proving that the difference in pay is due to a "bona fide factor" including education or training as well as experience.
The graph below shows how the percent change in family incomes before taxes amongst different income groups from 1980 to 2023 -the latest year currently available- in the state, courtesy of the Public Policy Institute of California.
Since 2016, median incomes have increased for families without any college graduates by 17 percent, but incomes at the highest level have grown by a notably larger amount and even larger income gaps are revealed when racial and ethnic groups are compared.
Black and Latino families make up 55 percent of families at or below the 10th percentile of income earners and just 12 percent of those above the 90th percentile and for every $1 a white family earns, Black families earn $0.63 and Latino families earn $0.52 detailed the Public Policy Institute of California.
While a multitude of factors play a role in wage disparity, women in California do earn a higher percentage compared to men when contrasted with the national average.
California ranks among the highest states for full-time wage and salaried women's median weekly earnings based on 2023 annual averages as shown in the map below courtesy of the U.S. Bureau of Labor Statistics.
When women's earning are mapped as a percentage of men's for full-time wage and salary workers by state, California, despite its massive population, is near the top for one of the narrowest gender pay gaps in the country.
Globally, the pay gap between men and women has been shown to be a notable impediment to broader economic growth.
"Women have the power to turbocharge the sputtering global economy," said Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics in March of 2024. "Closing this gap [in pay] could raise global gross domestic product by more than 20% - essentially doubling the global growth rate over the next decade".