Pay Discrimination and the California Equal Pay Act
An employee discovers that a colleague doing the same job earns significantly more. The difference does not correspond to experience, seniority, or performance. The employee suspects it corresponds to something else — gender, race, ethnicity. California’s Equal Pay Act addresses this directly, and its protections are among the strongest in the country.
Pay disparities are persistent, well-documented, and often invisible to the people they affect. An employee may work alongside a colleague for years without knowing that the colleague earns substantially more for substantially similar work. When the disparity comes to light — through a candid conversation, a leaked document, a promotion discussion, or a departing colleague’s disclosure — the employee is left with a fact and a question. The fact is the gap. The question is why.
California’s Equal Pay Act, Labor Code section 1197.5, provides a framework for answering that question. It prohibits employers from paying employees of one sex, race, or ethnicity less than employees of another sex, race, or ethnicity for substantially similar work. And it places the burden on the employer — not the employee — to justify the disparity.
What the statute requires
The Equal Pay Act prohibits an employer from paying any employee at wage rates less than the rates paid to employees of the opposite sex, or of another race, or of another ethnicity, for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.
Several features of this standard are worth noting.
Substantially similar work, not identical work. The comparison is not limited to employees with the same job title or the same job description. The question is whether the work is substantially similar when viewed as a composite of skill, effort, and responsibility. Two employees with different titles who perform work requiring comparable skill levels, comparable effort, and comparable responsibility are performing substantially similar work for purposes of the statute — even if their titles, departments, or reporting structures differ.
This is a significant expansion from the federal Equal Pay Act, which requires “equal work” — a narrower standard that historically limited comparisons to employees performing virtually identical jobs.
The burden is on the employer. Once the employee establishes a prima facie case — that they are paid less than a comparable employee of a different sex, race, or ethnicity for substantially similar work — the burden shifts to the employer to prove that the pay differential is entirely justified by one or more of the following factors: a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than sex, race, or ethnicity, such as education, training, or experience.
The employer must demonstrate that the factor relied upon is applied reasonably and accounts for the entire differential — not merely part of it. If the employer cannot fully justify the gap, the differential violates the statute.
Prior salary is not a justification. Labor Code section 1197.5 explicitly provides that prior salary, by itself, does not justify a pay differential. An employer cannot pay a woman less than a man because she earned less at her previous job. This provision addresses a cycle in which historical pay discrimination follows employees from job to job, with each new employer using the prior salary — itself the product of discrimination — to justify a lower offer.
California further reinforced this prohibition with Labor Code section 432.3, which prohibits employers from asking applicants about their salary history. An employer may not seek salary history information from an applicant, either directly or through an agent, and may not use an applicant’s prior salary to determine whether to offer employment or what salary to offer. The applicant may, however, voluntarily disclose prior salary, and the employer may consider it if the applicant does so without prompting.
How pay discrimination is discovered
Pay disparities are not always apparent, and their discovery often depends on the willingness of employees to share information — a right that California law specifically protects.
As discussed elsewhere in this series, Labor Code sections 232 and 232.5 protect employees’ right to discuss wages with coworkers, and the Equal Pay Act’s anti-retaliation provision separately prohibits employers from penalizing employees who inquire about, discuss, or disclose wages. These protections exist precisely because pay discrimination cannot be identified in silence.
In other cases, pay disparities emerge through less direct channels: a compensation study conducted during litigation or as part of an internal audit; data produced during discovery in a discrimination case; disclosures required by California’s pay transparency law, SB 1162, which requires employers with fifteen or more employees to include pay scale information in job postings.
SB 1162, effective January 1, 2023, also requires employers with one hundred or more employees to submit annual pay data reports to the CRD, broken down by job category, sex, race, and ethnicity. These reports create a data source that can reveal systemic pay disparities across large workforces.
The relationship between the Equal Pay Act and FEHA
An employee who is paid less than a colleague of a different sex, race, or ethnicity for substantially similar work may have claims under both the Equal Pay Act and FEHA. The two statutes address overlapping but distinct violations.
The Equal Pay Act focuses specifically on pay: it compares the wages paid to employees doing similar work and asks whether the differential is justified by legitimate factors. The employee does not need to prove discriminatory intent — the disparity itself, if unjustified, is the violation.
FEHA covers compensation discrimination as part of its broader prohibition on employment discrimination. A FEHA claim requires evidence that the pay disparity was motivated, at least in part, by the employee’s protected characteristic. The intent element makes the claim harder to prove in some cases, but FEHA provides broader remedies — including emotional distress damages and punitive damages — that the Equal Pay Act does not.
In practice, the two claims complement each other. The Equal Pay Act provides a vehicle for challenging unjustified pay disparities without proving intent. FEHA provides a vehicle for challenging intentional discrimination with a broader range of remedies. An employee with evidence of both an unjustified disparity and discriminatory intent can pursue both claims.
What constitutes a violation
A pay disparity between employees of different sexes, races, or ethnicities performing substantially similar work is a violation unless the employer can prove that the entire differential is explained by permissible factors: seniority, merit, productivity, or a bona fide factor such as education or experience that is job-related and consistent with business necessity.
The employer’s burden is not light. Each factor must be applied reasonably, must be job-related, and must account for the full differential. An employer that pays a male employee fifteen percent more than a female employee for the same work and attributes the difference to “experience” must show that the experience differential is real, that it is relevant to the job, and that it accounts for the entire pay gap — not just part of it.
If the employer’s justification accounts for some of the gap but not all of it, the unexplained portion is a violation. If the employer’s justification relies on a factor — such as prior salary — that the statute specifically excludes, the justification fails entirely.
Remedies
An employee who prevails on an Equal Pay Act claim is entitled to the difference in wages owed, plus an equal amount as liquidated damages (effectively doubling the recovery), plus interest, plus reasonable attorney’s fees and costs. The statute of limitations is two years from the date of the violation, or three years if the violation is willful.
Because pay discrimination is often ongoing — the disparity persists with each paycheck — the claim may encompass years of underpayment, and the damages can be substantial. Each paycheck that reflects the unjustified disparity is a separate violation, restarting the limitations period.
If you are paid less than a colleague of a different sex, race, or ethnicity for substantially similar work, the burden is not on you to prove why. It is on the employer to justify the difference — with factors that are legitimate, job-related, and sufficient to explain the entire gap. If the employer cannot, the disparity is unlawful.
This article is general information about California law and is not legal advice. Every situation turns on its particular facts.