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Nov 27, 2015
This article is part of a series called News & Trends.

What is being called the strongest equal pay law in the country goes into effect in California in a month, but its impact is already being felt, and not just in the Golden State.

With a stroke of his pen last month, Governor Jerry Brown approved a law requiring employers to pay equal wages to workers doing similar work. Any pay gap between men and women can only be based on factors such as seniority, skills, merit, or similar, gender-neutral considerations.

“The inequities that have plagued our state and have burdened women forever are slowly being resolved with this kind of bill,” Brown said at a bill-signing ceremony.

Although clearly aimed at closing the pay gap between women and their male counterparts, the law applies equally to men working in a female-dominated occupation such as nursing or as an administrative assistant.

While most states and the federal government have laws prohibiting pay differentials based on gender, the California law is unique in that the comparison is for “substantially similar work” rather than for “equal work,” a provision which most courts have interpreted to mean the same job or, in some cases, the same job title.

The California law also expressly allows employees to discuss their pay and to inquire about it, though employers aren’t obliged to divulge pay rates.

Aggrieved employees can complain to the state’s Division of Labor Standards Enforcement, or choose to sue on their own. Because recoveries of back pay tend to be too low to interest lawyers, the law now provides for the recovery of attorney’s fees.

Officially, the law will only affect California employees when it takes effect January 1. But companies with operations in multiple states could face claims by their California workers that out-of-state employees of the opposite sex are paid more for doing similar work.

In addition, the near-unanimous adoption of the California by Democrats and Republicans, and the support it got from the state’s Chamber of Commerce, has energized equal-pay advocates to push for similar laws nationwide.

“With the strong support for fair pay bills in the California legislature, a business community willing to prioritize pay equity for women, and calls for fair pay from the Oscars stage to the United Nations, it seems the tides are shifting toward closing the gender wage gap,” said Equal Rights Advocates executive director Noreen Farrell.

In an interview with Fortune, James McDonald, a managing partner at Fisher & Phillips, a national labor and employment law firm, said, “Efforts to get something like this through Congress have so far gotten nowhere, so more states are likely to consider adopting laws similar to California’s.”

To prepare for the law’s implementation, and the potential for employee claims, McDonald recommended that HR departments require more thorough documentation by hiring managers when they offer candidates above scale salaries.

And particularly for companies with California employees, HR should begin collecting detailed information on the specific job activity of every worker — not just the job description — and what everyone is paid. Differences in pay for similar work has to be explained in terms of the “business necessity,” which the California law defines as “an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve.”

This article is part of a series called News & Trends.
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