Liability & LegalQuestion 120 of 200

California's Equal Pay Act (Labor Code §1197.5) prohibits employers from paying employees of one sex, race, or ethnicity less than employees of another for substantially similar work. For PPOs and guards, this law:

a.Applies only to executives, not guards
b.Applies broadly — PPOs must pay guards performing substantially similar work substantially similar wages absent bona fide non-discriminatory factors (seniority, merit, production); employers also cannot rely on prior salary to justify a wage differential
c.Applies only after 10 years of employment
d.Allows pay differences based on the guard's race or sex if 'business need' is shown

Explanation

Labor Code §1197.5 prohibits pay disparities for 'substantially similar work' based on sex, race, or ethnicity. Permitted defenses include a bona fide seniority system, merit system, production-based system, or 'bona fide factor other than sex, race, or ethnicity' that is job-related and consistent with business necessity. Prior salary alone cannot justify the differential (Labor Code §432.3). The statute applies broadly to all California employers regardless of size, and to all employees (not just executives). Race-based or sex-based pay differentials are never permitted on a 'business need' theory (d). Combined with FEHA, the Act creates robust pay-equity obligations for PPOs.

Law Reference: Cal. Labor Code §1197.5 (CA Equal Pay Act); Gov Code §12940

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