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Fair Pay Act Investigations

California recently enacted new standards to combat discriminatory pay practices. California’s Fair Pay Act prohibits paying any employee less than the amount paid to employees of the opposite sex, race or ethnicity for doing “substantially similar work.” Employers have the burden of demonstrating that pay differential are based entirely and reasonably upon:

  • Seniority system, merit system, or system that measures earning by quantity or quality of production; or
  • Bona fide factor that is not based on or derived from sex-based differential compensation and that is job-related and consistent with business necessity.

Fair Pay Act Presentation

I recently attended a great presentation sponsored by the Alameda County Bar Association where Hillary Benham-Baker, Jamie Rudman and Carolyn Rashby did an excellent job describing the interplay between the various state and federal statutes, regulations and orders regarding equal pay. Jamie described a speaking engagement where Julie Su, California’s Labor Commissioner, discussed enforcing California’s Fair Pay Act. The Labor Commissioner discussed what questions Deputy Labor Commissioners would typically ask during Fair Pay Act investigations to determine what constitutes “substantially similar work.” I asked Jamie’s permission to share the information, as they represent excellent questions employers should ask themselves when evaluating whether they are complying with the law.

Fair Pay Act Questions To Determine What Constitutes “Substantially Similar Work”

·         What are the actual tasks performed for each job?  What percentage of time is spent on each?

·         What experience, training and education are required for each job?

·         What knowledge is required to perform each job?

·         What kinds and amounts of physical and/or mental effort are required for each job?  Is one job more physical difficult or stressful?

·          What programs, equipment, tools or products are required for each job? What training is needed to use the programs, equipment, tools or products?

·         What is the working environment?  Does one job involve an exposure to hazards or damages?

·         Does one job require supervision of other employees?

·         What is the difference in terms of the job obligations, levels of authority and/or degrees of accountability?

·         What are the programs, equipment, tools or products used for each job?

·         What kinds and amounts of physical and/or mental effort required for each job?

Employers need to understand what constitutes substantially similar work so they can properly evaluate whether or why employees should be paid the same. Pay disparities must be justified by legitimate business reasons.

If you have questions about equal pay, fair pay or any other employment-related issues, contact me at your convenience.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

California Employers Cannot Designate Choice of Law or Venue

What is a Choice of Law or Venue Provision?

Many contracts, including employment contracts, contain choice of law and/or a venue provisions. A choice of law provision directs a court which state’s laws apply. A venue provision dictates where to try the case. For example, even though you work in California, your employment contract could follow Massachusetts law. The contract could also require litigation in Texas. Courts generally enforce choice of law and venue provisions unless it violates a fundamental public policy.

Why Employers Like Choice of Law and Venue Provisions

Employers like choice of law and venue provisions for two main reasons:

  1. They allow the employer reasonable certainly of consistency regarding which laws, and how those laws, will be applied.
  2. They allow the employer to move a case to a more favorable forum.

For employees, a choice of law provision deprives the employee access to California’s more beneficial laws.

On September 25, 2016, Governor Brown signed sB 1241 prohibiting employers from forcing employees to sign choice of law or venue provisions requiring litigation outside California.  Effective January 1, 2017, SB 1241 adds Labor Code section 925, which states:

(a) An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following:

(1) Require the employee to adjudicate outside of California a claim arising in California.

(2) Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.

(b) Any provision of a contract that violates subdivision (a) is voidable by the employee, and if a provision is rendered void at the request of the employee, the matter shall be adjudicated in California and California law shall govern the dispute.

(c) In addition to injunctive relief and any other remedies available, a court may award an employee who is enforcing his or her rights under this section reasonable attorney’s fees.

(d) For purposes of this section, adjudication includes litigation and arbitration.

(e) This section shall not apply to a contract with an employee who is in fact individually represented by legal counsel in negotiating the terms of an agreement to designate either the venue or forum in which a controversy arising from the employment contract may be adjudicated or the choice of law to be applied.

(f) This section shall apply to a contract entered into, modified, or extended on or after January 1, 2017.

Effect of Prohibition again Non-California Choice of Law and Venue Clauses

There are two significant areas where I have seen choice of law provisions make a big difference in litigation: Non-competition/non-solicitation clauses and arbitration clauses.  California is one of the toughest states when it comes to non-compete clauses. Most other states allow an employer to prevent an employee from working with a competitor. In California, such agreements are usually void. As a result, companies oftentimes require litigation in more favorable states. In some cases, my clients were prevented from working for employers because the non-competition clauses were upheld in other states. New Labor Code 925 prevents that from happening.

I wrote several arguments about the enforceability of arbitration clauses in California. Although California courts seem to be currently favoring arbitration–or at least allowing it–there is still significant efforts to keep employment cases out of arbitration in California. Employers have an easier time enforcing arbitration agreements in other states. This new law will make it more difficult for companies to move employment cases into arbitration.

Choice of Law and Venue Choice OK If Employee Attorney Involved

The new Labor Code contains an exception for cases where the employee “is in fact individually represented by legal counsel in negotiating the terms of an agreement.” The statute doesn’t specify whether the attorney must actually negotiate the terms, or whether the employee needs to simply consult with an attorney regarding the negotiations. I expect that may come up in future cases. Don’t be surprised if this provision is challenged in court on other grounds. I also question whether courts in other states will even enforce the new Labor Code.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.