California's New Fair Pay Act for Women

Early in October, California's Governor Brown signed the Fair Pay Act into law. This is touted as the strongest law in the nation for equalizing gender pay in the State. Highlights follow:

• Women's pay must be equal for work that is "substantially similar".
• If not, women have the right to sue the employer for higher wages.
• Women are free to discuss pay and demand higher pay without retaliation.
• While employers are mandated to discuss pay with women employees, they are not required to disclose the actual salaries of any other employees.
• Higher pay for male employees is justifiable if based on merit raises, seniority, or any other reason that is not gender based.

For the most part, I don't think this law will change women's pay disparity very much.

First of all, much of women's pay disparity is based on choice of occupation, choice of education, and the exiting and reentry into the workforce for purposes of raising a family.  These things can place them at the back of the line of experience levels.

Also, because the law assumes that you have to know what someone else is being paid;  and in most companies, salaries are not published, the number of lawsuits will be almost non-existent.  Where that might be a problem is in three places:

Hollywood, Hollywood, and Hollywood. 

In Hollywood and the movie and TV industry, men dominate.  Of the Forbes 35 highest paid actors, not one is a woman.  Of the top grossing movies from 2002 to 2014, women only directed 4.1%.  And, the list goes on.  In fact, the Equal Opportunity Commission has launched an investigation on gender bias in Hollywood in general.

This presents an interesting quandary for the politicians that passed the Fair Pay Act.  Hollywood houses a major industry in California.  Is it possible that the film industry might move out in order to potentially avoid the hundreds of lawsuits that could arise because of the new law?  Who knows?  Also, Hollywood could just fold their tent and move elsewhere if too many nuisance lawsuits are filed against them.  A fact that would seriously hurt California's already-growing tax revenue shortfalls.

Lastly, where I think companies will run afoul with the law is in "help wanted" ads.  If a company advertises a pay range for a new job that is higher than a woman that has an existing and "substantially similar" job, this could cause a lawsuit to be filed. Companies would be well advised not to advertise pay ranges for that reason, even if the job title is different.  Basically, a law like this is a magnet for lawyers who know companies might just settle rather litigate; even if they are on solid ground.  Paying someone a few hundred, or even a few thousand dollars a year more, may be better than spending thousands of dollars to defend an equal pay lawsuit.  And, if lawsuits get too prevalent, companies will simply decide to move out of California or shut down.  Not good.

References:

California governor approves expansive new equal pay protections targeting gender wage gap: http://www.usnews.com/news/business/articles/2015/10/06/california-to-enact-tough-equal-pay-law-to-address-wage-gap

Highest Paid Actors 2015: http://www.forbes.com/pictures/emjl45mmei/the-worlds-highest-paid-/

Study shows how women directors get blocked in Hollywood: http://fortune.com/2015/10/06/women-directors-hollywood/