California Gov. Jerry Brown’s signing Tuesday of what is billed as the nation’s toughest equal pay law drew loud applause but also alarm over the additional government regulation threatening to accelerate the state’s business exodus — with implications for Tinseltown too.
The California Fair Pay Act strengthens the state’s existing equal-pay law by forbidding employers from paying employees less than their opposite-sex counterparts for “substantially similar work,” not just “equal work” — a far more subjective and thus litigation-friendly standard. It also prohibits employers from retaliating against those who seek to raise their pay under the law.
“Sixty-six years after passage of the California Equal Pay Act, many women still earn less money than men doing the same or similar work,” said Mr. Brown. “This bill is another step toward closing the persistent wage gap between men and women.”
The law also allows employees to challenge the fairness of their pay before the state Division of Labor Standards by drawing comparisons to “substantially similar” jobs with different titles or at other work sites.
Equal Rights Advocates executive director Noreen Farrell lauded the newly signed law as “the strongest equal-pay law in the country,” while the conservative California Political Review’s Stephen Frank predicted the bill would usher in “government control of wages and work.”
The National Partnership for Women & Families reported last year that California women make 84 cents for every dollar earned by men, but free market advocates have disputed the wage gap, arguing that it all but disappears when factoring in career choice, years worked, part-time versus full-time hours and other measures.
Richard A. Epstein, senior fellow at the Hoover Institution at Stanford University, called the California bill “crazy,” predicting it would intensify the state’s economic woes by creating an “administrative quagmire” that will discourage voluntary job changes and encourage companies to leave or reduce their state footprint.
“The asymmetrical outcomes are likely to distort labor markets further, and to give firms a strong incentive to expand their businesses elsewhere and even to transfer existing work out of the state,” Mr. Epstein, a New York University Law School professor, said in an October 1 post on his Hoover blog.
Even so, the bill, Senate Bill 358, passed with almost no opposition. Only two Assembly Republicans voted against the legislation on the floor, while no state senators opposed the measure.
One reason: The California Chamber of Commerce, which originally resisted the legislation but then agreed to withdraw its opposition after negotiating with state Democrats, saying that the bill clarifies some previously ambiguous terms.
The bill also continues to provide exemptions for pay systems based on seniority, merit, quantitative and qualitative production or a “bona fide factor other than sex, such as education, training or experience.”
“Equal pay for equal work, regardless of gender, shouldn’t be an issue in California,” said CalChamber president and CEO Allan Zaremberg in a statement. “We applaud the Governor and a bipartisan vote in the legislature for establishing this fundamental tenet in statute and providing guidance to employers to determine appropriate wages for non-gender related reasons that allow employers to effectively manage their workforce.”
As Mr. Epstein sees it, however, “The business guys are playing rope-a-dope. They think they can withstand this, they’ve got enough in there so that every case can be contested, but there’s not enough in there so that any case can be cleanly won. Absolutely, it’s a disaster.”
The measure was also supported by Senate Republican Leader Jean Fuller and Assembly Republican Leader Kristin Olsen, who said the law would “provide for equal pay for equal work, while ensuring that we avoid a climate of unnecessary litigation.”
One Republican who voted against the bill was Assemblymember Bill Brough, who said he wants to see women earn equal pay, but that he believes the bill will “create a more hostile work environment and more frivolous litigation.”
He said California needs “higher wages and not just additional regulations that drive businesses out of the state.”
“California should be booming. We shouldn’t be slumping,” Mr. Brough said. “This was a good headline bill, but if you actually read the bill, it’s not going to get us there. It just doesn’t accomplish what it says it would.”
The newly signed law, which goes into effect January 1, has a Hollywood connection: The bill was introduced earlier this year by Democratic state Sen. Hannah-Beth Jackson shortly after actress Patricia Arquette called for equal pay in her Academy Awards acceptance speech.
However, the Hollywood film industry is notorious for paying more to leading actors than to its female stars and for having more leading roles available for the men as well.
On his website, Mr. Frank noted the juxtaposition with a touch of schadenfreude.
“The good news is that the Leftists in Hollywood and the media should be the first to feel the effect of government control of wages and work,” said Mr. Frank on his website.