In many businesses, it is an unwritten rule that management does not want employees discussing their salaries. While the National Labor Relations Act of 1935 (NLRA) prohibits employers from discouraging their employees from talking about their pay, this federal law provides for no real consequences if the employers do so. As a result, the majority of employers in the country employ these “gag orders” in their workplaces.
States like California are beginning to change this status quo. When the Fair Pay Act (FPA) went into effect on January 1, 2016, California became one of only a handful of states that makes it illegal for employers to forbid their employees from discussing their wages.
The main goal of the FPA is to fix the wage gap between male and female employees. Under the law, men and women need to be paid equally for performing substantially similar work. In order to encourage workers to discover if such a pay gap exists, employees need to be able to speak with each other about their salaries without fear of repercussions. Accordingly, the law contains a provision which prohibits employers from retaliating or discriminating against workers for talking about their pay.
If an employee brings a lawsuit based on unequal pay, the employer will be required to prove that it is not compensating workers differently based on gender. If a difference in pay is discovered, employers are required to show a legitimate reason for the difference. Employers are allowed to use a system based on seniority, merit, education, experience, or other relevant factors, but this system must explain the entire amount of the pay discrepancy.
The FPA includes all workers at a specific company, including those in different locations. For example, workers at a clothing chain in San Francisco can legally compare their salaries with employees of the same chain in Los Angeles. If there is a disparity, the employer will have an obligation to justify the difference in pay.
The FPA creates a private right of action with a one-year statute of limitations. Employees who allege that they were fired, discriminated against, or retaliated against for engaging in any of the conduct listed in the statute have the right to file a lawsuit seeking reimbursement for lost wages and benefits as well as other types of relief that a court deems fair. Employees also have the option of filing a claim against their employer with the California Division of Labor Standards Enforcement.
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