California legislation aims to narrow the gender pay gap

Oct 5, 2017

California is often a national bellwether for laws favored by worker and consumer-rights groups. The legislature sent Gov. Jerry Brown a pair of bills in the recent session that women’s rights advocates support, and many employers — led by the California Chamber of Commerce — strongly oppose.

AB 1209 — the Gender Pay Gap Transparency Act — would require companies with 500 or more employees in California to report the gap between men’s and women’s pay for salaried workers, by job classification, and board members. The information would be posted publicly by the state. AB 168 would amend the state’s employment laws to ban employers from asking a job candidate about their previous salary or salary history (job candidates could still volunteer the information unsolicited, without penalty to the employer).

Both bills are aimed at closing the gender pay gap.

“Equal pay is very high on the agenda politically, it polls well,” said Ariane Hegewisch, the Institute for Women's Policy Research program director for employment and earnings. “Fairness matters to women and men.”

Hegewisch said that pay equity laws and policies put in place in the past several decades substantially narrowed the earnings gap. Women working full time earned about 60 percent of what men earned in 1980, according to census data analyzed by the National Women’s Law Center. Women earn about 80 percent of what men do now; the figure is slightly higher in California.

But Hegewisch said that progress toward pay equity has stalled since the Great Recession.

“It has stagnated,” Hegewisch said. “We know women are outpacing men in education. The differences in time out of work for kids and so on have shrunk quite significantly. Something is wrong, and we need try some things to get things moving.”

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IWPR and other women’s rights groups support the new pay transparency measures in California. But the California Chamber of Commerce strongly opposed them and is urging the governor to veto them. In its literature and constituent updates, the Chamber calls AB 1209 the "Public Shaming of California Employers" act.

“It creates a huge concern from the employers’ perspective about the public shaming aspect of the proposal, as well as exposure to litigation,” said Jennifer Barrera, the Chamber’s senior policy advocate. “There are going to be discrepancies. For instance, one employee could be at the company for one year, and the other one for 20 years. You would definitely expect that the person with more longevity would have a higher compensation.”

Barrera said that if such a company was identified on the state’s website as paying men in a given job category more than women, “the company is going to receive unfair criticism that they’re engaged in some type of gender pay discrimination or inequity, when if you looked further and got more context, you would see ‘Oh, that’s because of a bona fide factor.’”

Barrera said employers can pay workers more if they have more experience or education, or bring in better sales numbers. She said that could lead to an apparent gender pay gap based on legitimate employment factors, but would not be the result of gender discrimination. Barrera also said it’s not clear what will be counted as “wages” for purposes of comparing men’s and women’s pay, and that if women take more pre-tax deductions (for retirement savings, child or health care, for instance) that might appear as a gender pay gap as well.

Laura Kray is a professor of leadership at University of California, Berkeley’s Haas School of Business, and she researches the role of gender in salary negotiations. She supports AB 1209.

“Certainly, great care will need to be taken around the numbers that are provided,” Kray said. “Just like any report card, it will give you a snapshot of how well employers are doing overall.” She said that the collection and publication of wage data by gender and job classification “aims to look in the aggregate, to see if there’s a systemic issue with women as a group being consistently underpaid relative to men.”

Kray said that while the publication of an individual company’s data may shame employers that have poor pay equity ratios, it could help women in job negotiations.

“Star women in the marketplace who have multiple offers may be able to ask that prospective employer, ‘What are you doing to advance pay equity? I want to make sure that I’m coming on board to a company where this is a deeply held value.’”