§ 1197.5. — 1197.5. (Amended by Stats. 2025, Ch. 468, Sec. 2.)

(a)
An employer shall not pay any of its employees at wage rates less than the rates paid to employees of another sex 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:
(1)
The wage differential is based upon one or more of the following factors:
(A)
A seniority system.
(B)
A merit system.
(C)
A system that measures earnings by quantity or quality of production.
(D)
A bona fide factor other than sex, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. For purposes of this subparagraph, “business necessity” means an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.
(2)
Each factor relied upon is applied reasonably.
(3)
The one or more factors relied upon account for the entire wage differential.
(4)
Prior salary shall not justify any disparity in compensation. Nothing in this section shall be interpreted to mean that an employer may not make a compensation decision based on a current employee’s existing salary, so long as any wage differential resulting from that compensation decision is justified by one or more of the factors in this subdivision.
(b)
An employer shall not pay any of its employees at wage rates less than the rates paid to employees 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:
(1)
The wage differential is based upon one or more of the following factors:
(A)
A seniority system.
(B)
A merit system.
(C)
A system that measures earnings by quantity or quality of production.
(D)
A bona fide factor other than race or ethnicity, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a race- or ethnicity-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity.
For purposes of this subparagraph, “business necessity” means an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.
(2)
Each factor relied upon is applied reasonably.
(3)
The one or more factors relied upon account for the entire wage differential.
(4)
Prior salary shall not justify any disparity in compensation. Nothing in this section shall be interpreted to mean that an employer may not make a compensation decision based on a current employee’s
existing salary, so long as any wage differential resulting from that compensation decision is justified by one or more of the factors listed in this subdivision.
(c)
Any employer who violates subdivision (a) or (b) is liable to the employee affected in the amount of the wages, and interest thereon, of which the employee is deprived by reason of the violation, and an additional equal amount as liquidated damages.
(d)
The Division of Labor Standards Enforcement shall administer and enforce this section. If the division finds that an employer has violated this section, it may supervise the payment of wages and interest found to be due and unpaid to employees under subdivision (a) or (b). Acceptance of payment in full made by an employer and approved by the division shall constitute a waiver
on the part of the employee of the employee’s cause of action under subdivision (h).
(e)
Every employer shall maintain records of the wages and wage rates, job classifications, and other terms and conditions of employment of the persons employed by the employer. All of the records shall be kept on file for a period of three years.
(f)
Any employee may file a complaint with the division that the wages paid are less than the wages to which the employee is entitled under subdivision (a) or (b) or that the employer is in violation of subdivision (k). The complaint shall be investigated as provided in subdivision (b) of Section 98.7. The division shall keep confidential the name of any employee who submits to the division a complaint regarding an alleged violation of subdivision (a),
(b), or (k) until the division establishes the validity of the complaint, unless the division must abridge confidentiality to investigate the complaint. The name of the complaining employee shall remain confidential if the complaint is withdrawn before the confidentiality is abridged by the division. The division shall take all proceedings necessary to enforce the payment of any sums found to be due and unpaid to these employees.
(g)
The department or division may commence and prosecute, unless otherwise requested by the employee or affected group of employees, a civil action on behalf of the employee and on behalf of a similarly affected group of employees to recover unpaid wages and liquidated damages under subdivision (a) or (b), and in addition shall be entitled to recover costs of suit. The consent of any employee to the bringing of any
action shall constitute a waiver on the part of the employee of the employee’s cause of action under subdivision (h) unless the action is dismissed without prejudice by the department or the division, except that the employee may intervene in the suit or may initiate independent action if the suit has not been determined within 180 days from the date of the filing of the complaint.
(h)
An employee receiving less than the wage to which the employee is entitled under this section may recover in a civil action the balance of the wages, including interest thereon, and an equal amount as liquidated damages, together with the costs of the suit and reasonable attorney’s fees, notwithstanding any agreement to work for a lesser wage.
(i)
(1)
A civil action to
recover wages under subdivision (a) or (b) may be commenced no later than three years after the last date the cause of action occurs.
(2)
An employee is entitled to obtain relief for the entire period of time in which a violation of subdivision (a) or (b) exists, but not to exceed six years.
(3)
For purposes of this subdivision, a cause of action occurs when any of the following occur:
(A)
An
alleged unlawful compensation decision or other practice is adopted.
(B)
An individual becomes subject to an alleged unlawful compensation decision or other practice.
(C)
When an individual is affected by application of an alleged unlawful compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from the
decision or other practice.
(4)
Nothing in this subdivision shall prohibit the application of the doctrine of “continuing violation” or the “discovery rule” to any appropriate claim.
(j)
If an employee recovers amounts due to the employee under subdivision (c), and also files a complaint or brings an action under subdivision (d) of Section 206 of Title 29 of the United States Code which results in an additional recovery under federal law for the same violation, the employee shall return to the employer the amounts recovered under subdivision (c), or the amounts recovered under federal law, whichever is less.
(k)
(1)
An employer shall not discharge, or in any manner discriminate or retaliate against,
any employee by reason of any action taken by the employee to invoke or assist in any manner the enforcement of this section. If an employer engages in any action prohibited by this section within 90 days of the protected activity specified in this section, there shall be a rebuttable presumption in favor of the employee’s claim. An employer shall not prohibit an employee from disclosing the employee’s own wages, discussing the wages of others, inquiring about another employee’s wages, or aiding or encouraging any other employee to exercise their rights under this section. Nothing in this section creates an obligation to disclose wages.
(2)
Any employee who has been discharged, discriminated or retaliated against, in the terms and conditions of their employment because the employee engaged in any conduct delineated in this section may
recover in a civil action reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer, including interest thereon, as well as appropriate equitable relief.
(3)
A civil action brought under this subdivision may be commenced no later than one year after the cause of action occurs.
(l)
As used in this section:
(1)
“Employer” includes public and private employers. Section 1199.5 does not apply to a public employer.
(2)
“Sex” has the same meaning as defined in Section 12926 of the Government Code.
(3)
“Wages” and “wage rates” include all forms of pay, including,
but not limited to, salary, overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.
Nothing in this paragraph shall be construed to define “wages” or “wage rates” for purposes of any other section of this code.

Legislative History

Amended by Stats. 2025, Ch. 468, Sec. 2. (SB 642) Effective January 1, 2026.