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Pay equity isn’t just a legal requirement; it’s a cornerstone of workplace fairness and trust. Achieving true pay equity goes beyond compliance; it demands transparency. When organizations openly share pay scales and how pay decisions are made, they empower employees, reduce bias, and foster a culture of accountability. Transparency transforms pay equity from an abstract ideal into a measurable, actionable reality. California is leading the way on pay transparency, setting a powerful example with laws that require employers to disclose salary ranges and promote equitable practices.
California first enacted its Equal Pay Act (Labor Code §1197.5) in 1949, making it one of the earliest state laws to prohibit wage discrimination based on sex. The original statute barred employers from paying employees of one sex less than those of the opposite sex in the same establishment for equal work requiring equal skill, effort, and responsibility under similar working conditions, with limited exceptions for seniority, merit, production-based systems, or other bona fide factors unrelated to sex. For decades, however, enforcement was weak, and the law left significant gaps that allowed pay disparities to persist. Pay secrecy and narrow definitions of “equal work” made it difficult for employees to challenge inequities, and as such, lawsuits under the statute were rare.
Recognizing these shortcomings, California passed the Fair Pay Act of 2015, which substantially strengthened the Equal Pay Act by closing loopholes that had undermined enforcement. The amendments replaced the rigid “equal work” standard with a broader requirement for equal pay for “substantially similar work,” eliminated the “same establishment” limitation, and tightened employer defenses by requiring that any wage differential be based entirely on legitimate factors applied reasonably and accounting for the entire disparity. The Fair Pay Act also prohibited retaliation against employees who discuss or inquire about wages and extended recordkeeping obligations, reinforcing transparency and accountability in pay practices.
Over the next decade, California advanced pay equity through additional reforms. The Equal Pay Act expanded beyond gender to include race and ethnicity, ensuring broader fairness. Labor Code §432.3 banned employers from seeking or relying on an applicant’s salary history when deciding whether to hire or what salary to offer, breaking cycles of wage inequality and anchoring pay decisions in merit. Regulatory oversight grew with annual pay data reporting for large employers, equipping regulators to uncover systemic disparities. Finally, salary range disclosure in job postings elevated transparency— empowering job seekers and reducing hidden inequities.
This year, California took its quest for pay equity even further. In October, Governor Gavin Newsom signed Senate Bills 642 and 464, effective January 1, ushering in the most ambitious reforms to date. SB 642 broadens the definition of wages to include all forms of compensation—salary, bonuses, stock options, and benefits—and extends protections to cover gender identity and expression. It strengthens transparency by requiring precise salary ranges in job postings and limiting overly broad pay bands, ensuring clarity for job seekers. It also expands enforcement by lengthening the statute of limitations and increasing recovery periods for lost wages, giving employees greater access to justice.
SB 464 enhances pay data reporting requirements. Employers with 100+ employees must store demographic data separately from personnel records and face mandatory civil penalties for non-compliance. Beginning in 2027, reporting will shift to 23 Standard Occupational Classification categories, providing more granular workforce analysis and accountability.
Together, these reforms reflect California’s evolution from basic compliance to proactive transparency and accountability. Employers must adapt not only to meet legal requirements but to build trust and fairness in the workplace, and setting a model for the nation.
