California has prohibited gender-based wage discrimination since 1949. Courts ruled that the law applied only to exactly the same work. The state took it one step further this week by passing a law this week saying that women have a discrimination claim if there is unequal pay for substantially similar work. Some feel that the new law is good news for everyone from cleaning crews to Hollywood’s biggest actresses.

Practically speaking, the decision could lead to renewed interest in job analysis (let’s not get too excited, OK?). The law is written so that the burden is on the employer to demonstrate that the difference in pay is due to job related factors and not gender. So, if someone is going to argue that two jobs are substantially similar, there is going to need to be some data to back that up.

The law states that similarities are based on “a composite of skill, effort, and responsibility, and performed under similar working conditions.” A good job analysis will quantify these so that jobs can be compared. Who knows what statistical test tells you when jobs are substantially similar, but the data will tell you if they are the same or really different, and that’s a start. Regardless, I’m guessing that the meaning and demonstration of substantially similar will be litigated for a while.

The other impact of this law is likely to be on salary/raise negotiations. There’s plenty of data which indicates that men are less averse to this process than women, and this has real economic impacts. Companies may want to consider whether to make non-negotiable offers to avoid bias claims.

California, as usual, is setting a new standard in equal pay legislation. There’s the usual concern that this will cost the state jobs, but it may also attract more professional women. Either way, companies will need to review their compensation structures and determine which jobs are substantially similar to each other.

For more information on analyzing and grouping job titles, please contact Warren Bobrow.