California’s Fair Pay Act has the potential to be a game-changer. Effective January 1, 2016, it will be illegal for an employer in California to “pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions ….”

As Elaine Reardon, Ph.D., explained in Law360 (subscription required), the fact that the statute calls for a “composite” of these variables implies that each won’t be examined separately. Analyzing a composite of variables requires statistics, and statistical analysis requires that employers quantify these factors. It won’t be enough to say candidate A works in harsher conditions than candidate B and that’s why A is paid more. The CFPA requires statistical analyses, not subjective comparisons. If anyone doubts that, just look at the requirement that employers prove that legitimate factors account for the entire wage disparity. iStock_000000972095Small

These are daunting challenges, especially since it will be years before the CFPA’s requirements are clarified through court rulings, amendment, or regulation. However, with the statute taking effect in just over 60 days, employers need to start tackling these issues now and it makes sense to protect that analysis with the attorney-client privilege.

If you’d like to review our earlier Fair Pay Act posts, I wrote here about whether the new law will open the proverbial floodgates of litigation and here about steps employers should take to prepare. In addition, Nancy Yaffe and Sahara Pynes wrote this alert explaining the new law’s requirements.