How California’s Equal Pay Act Goes Further Than the Federal Law for San Jose Workers

Most people assume that if the federal government already passed a law banning unequal pay, state law just repeats it. Is that actually true in California? A closer look at the two statutes shows they diverge in some important ways, and the gap matters for how a worker in Santa Clara County or anywhere in California might evaluate a pay disparity at their job.

The Federal Law Sets a Narrow Baseline

The Equal Pay Act of 1963 is the federal starting point. Codified at 29 U.S.C. § 206(d), it bars an employer from paying employees of one sex less than employees of the opposite sex for equal work performed within the same establishment, where the jobs require equal skill, effort, and responsibility under similar working conditions. That phrase, “same establishment,” has done a lot of work over the decades. Courts have generally read it to mean a single physical place of business, which raises an obvious question for a large employer with offices scattered across the Bay Area. If a comparable role exists at a different site, does the federal law even reach it?

There is also the matter of who is protected. The federal statute is written around sex-based comparisons. It does not, on its own text, extend to disparities tied to race or ethnicity.

California’s Statute Widens Both the Comparison and the Coverage

California’s version of an equal pay law, found in Labor Code section 1197.5, was rewritten through the Fair Pay Act and later amendments to close some of these gaps. Two changes stand out.

• First, the “same establishment” limitation is gone. California instead asks whether employees perform “substantially similar work,” described as a composite of skill, effort, and responsibility, performed under similar working conditions, regardless of job title and regardless of whether the employees work at the same location. A worker in San Jose could, in theory, point to a comparably situated colleague at a company office elsewhere in the state.
• Second, the California statute is not limited to sex. It also prohibits paying an employee less than an employee of another race or another ethnicity for substantially similar work. That is a real expansion beyond what the federal EPA covers on its face.

What About the Employer’s Defenses?

Both laws let an employer justify a pay gap using certain recognized factors, among them a seniority system, a merit system, a system tied to quantity or quality of production, or another legitimate factor unrelated to the protected characteristic. California’s statute goes a step further by specifying that any relied-upon factor must be applied reasonably, must account for the entire pay differential, and must be job-related and consistent with business necessity. It is a more structured framework than the federal version, and it places more of the analytical burden on the employer to justify why the gap exists.

Recent Changes Add Teeth to Enforcement

California lawmakers have continued to adjust this statute in recent years, including a 2026 update that lengthens the window for filing a wage claim and expands recovery options for employees. That is a reminder that this is not a static area of law. A comparison that was accurate a few years ago may already be outdated.

Our San Jose Employment Lawyers Can Help Evaluate a Pay Disparity

None of this is a substitute for reviewing the specific facts of a particular pay situation, and general information about these statutes should not be treated as legal advice. If you have questions about how the state and federal equal pay laws might apply to your circumstances, our San Jose Equal Pay Act lawyers at Costanzo Law Firm, APC are available to talk through what you are seeing at work. Contact us today to arrange a consultation.

Source:

leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=1197.5.&lawCode=LAB