U.S. - California - San Diego Equal Pay Ordinance guide
Introduction
Effective July 31, 2017, the San Diego City Council unanimously approved the Equal Pay Ordinance, becoming the largest city in the nation to pass its own equal pay legislation.
Under the ordinance, employers that contract with the city of San Diego must comply with California Equal Pay Act and Fair Pay Act, as codified in California Labor Code section 1197.5. This means that those employers must pay their employees equal wage rates for equal or substantially similar work, regardless of an employee's gender, race, or ethnicity.
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San Diego Law Requirements
The law applies to all contractors with city contracts awarded, entered into, or extended after Jan. 1, 2018. This includes sub-contracts for work on behalf of the city. Certain exceptions apply, such as for small contractors (defined as employing 12 or fewer full-time equivalent employees for at least 20 weeks), contracts for intellectual property licensing, and public works contracts (building or repairing public property such as streets or utilities) totaling less than $500,000. There is also a catch-all exception for situations where the Equal Pay Ordinance would be inconsistent or violate federal or state law.
San Diego's equal pay law has three major requirements:
- Notice and posting: Each covered contractor must post a notice to employees in a conspicuous place to inform them of their right to equal pay regardless of race, gender, or ethnicity for those performing substantially similar work.
- Retention of records: The records retention requirement is the most time intensive of the three, and creates the greatest potential for violations. Covered contractors must create written records documenting wage paid, wage rates, and job classifications for each employee. "Wages" are broadly defined. These can include items ranging from salary/hourly rates paid, travel, use of a company car, and fringe benefits. These records are subject to audit by the city and must be "contemporaneous" (i.e. not created in an ad-hoc fashion at a later date), such as in response to an audit request. In fact, a contractor's failure to create and maintain compensation creates the rebuttable presumption of an Equal Pay Ordinance violation. The city has not given an indication of how often it will audit contractor records.
- Certification of compliance with California law: As a condition of doing business with the city, covered contractors must sign a certification of compliance with the California Equal Pay Act and Fair Pay Act, as defined in California Labor Code Section 1197.5. This requires that an employer shall not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex or of another race or ethnicity for substantially similar work, when viewed as a composite of skill, effort and responsibility, and performed under similar working conditions, except where the employer demonstrates the wage differential is based upon one or more of the following factors: a seniority system, a merit system, a system that measures earnings by quantity or quality of production or a bona fide factor other than sex, such as education, training or experience.
The Risks of Non-Compliance
If the city determines that a contractor or subcontractor has violated the Equal Pay Ordinance, the city issues a Notice to Cure, giving it 30 days to remedy the violation. If the violation is not remedied, the city can cancel, terminate, or suspend a contract in whole or in part, in addition to imposing any penalties drafted into the contract.
How Can Trusaic Assist with San Diego's Equal Pay Ordinance Requirements?
1. Comply - Use Trusaic's RAPTR solution to complete required reporting by compliance deadlines:
Applicability Determination: Perform an accurate assessment of your applicability, according to jurisdictional specific definitions and regulatory frameworks so you can understand your reporting obligations across the globe.
Deadline Management: Prepare ahead of time with project timelines, timely notifications, and reminders, to keep you on track to meeting jurisdictional deadlines.
Expert Legal Guidance and Support: Benefit from the expertise of our trusted pay equity attorneys, so you understand your compliance requirements across a diverse global regulatory landscape. Receive world-class customer support, including assistance throughout the compliance process.
Streamlined Data Extraction: Collect the necessary data for analysis and submission with a simple click of a button; powered by certified data integrations with the world's largest HCM, HR and Payroll platforms, including Workday, SAP, UKG and ADP. Provide data through Trusaic's Workplace Equity platform, a SOC 2 Type II and GDPR-compliant tool for data transmission.
Data Quality Assurance: Trusaic performs data validations to ensure your collected data and information aligns with the standards and definitions provided by each jurisdiction.
Compliant Report Outputs: Take away the burden of reporting by effortlessly generating outputs containing necessary compliance information.
Reporting Checklist: Follow step-by-step guidance on where, when and how to report to any jurisdiction's regulatory body, as well as your required internal disclosure and public posting obligations.
2. Correct - Use PayParity and OpportunityParity to understand, explain and resolve pay disparities:
Risk Assessments: Stay aware of any potential exposure to any government audit or litigation. Our cross-functional team of data scientists, statisticians, and government regulatory compliance experts have rigorously worked to reverse-engineer the calculations that will be used by jurisdictions to estimate pay disparities, so you can prepare in advance.
Understand your Pay Gaps: Leverage Trusaic's pay equity software solution to explain your pay gaps so you can understand the root causes and safeguard from equal pay claims and legal action.
Resolve Pay Disparities: Make pay adjustments where applicable so you can eliminate pay disparities and show improvements in your reported pay gaps from one year to the next.
Identify Barriers to Professional Growth: Ensure workforce diversity and equity with hiring, promotion, retention, and opportunity analytics using opportunity equity software solution.
3. Communicate - Use Trusaic's Workplace Equity Solution to communicate narratives and share salary ranges with confidence:
Pay Equity Narrative: Communicate the sources of your pay gaps, progress objectives, and corrective measures to employees and internal stakeholders with Trusaic's Workplace Equity product suite. Show data-backed progress in your pay gaps over time.
Salary Range Explainability: Use Salary Range Finder to establish and post competitive and equitable pay ranges to confidently comply with pay transparency laws.
Mitigate Risk of Recurrent Pay Disparities: Ensure new hires receive fair pay offers with the use of external labor market data and internal pay equity analytics to reduce unplanned and expensive pay remediations.