November 26, 2025
Effective January 1, 2026, California employees must comply with a revised Equal Pay Act. Specifically, California equal pay laws now require even more employer diligence in avoiding discrimination. Among other changes detailed below, the revisions clarify that employers must make a “good faith estimate” of the pay scale they are required to provide applicants and employees, and more clearly define what is meant by “sex” for purposes of equal pay protections.
Understanding the new “Good Faith Estimate” requirement
California law already requires employers to provide the salary or hourly wage range that the employer reasonably expects to pay for a position (the “pay scale”) upon the reasonable request of an applicant and upon the request of an employee for their current position. In addition, employers with 15 or more employees are required to post the pay scale in job postings, and to provide it to third parties engaged by the employer to post jobs.
The clarified Equal Pay Act requires that, in providing the pay scale, the employer must make a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire. Employers are expected to review both the upper and lower limits of their pay scales to determine whether they reasonable expect to pay those wages for the relevant job position.
The clarified definition of “sex” and of equal pay based on “sex”
The Equal Pay Act prohibits employers from paying employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work performed under similar working conditions. Effective January 1, 2026, the Act is revised to prohibit employers from paying employees at wage rates less than the rates paid to employees of another sex.
The Equal Pay Act has adopted the Fair Employment and Housing Act’s definition of sex, which includes but is not limited to: a person’s gender identity and expression; pregnancy or medical conditions related to pregnancy; childbirth or medical conditions related to childbirth; and breastfeeding or medical conditions related to breastfeeding.
Changes to when a claim may be commenced
The Equal Pay Act previously required that a civil action claiming violation of the Act “must be commenced no later than two years “after the cause of action occurs” (more on this below), except that a cause of action arising out of a willful violation may be commenced no later than three years after the cause of action occurs.”
Effective January 1, 2026, a civil action to recover wages under the Act may be commenced no later than three years after the last date the cause of action occurs.
Employees are also entitled to obtain relief for the entire period of time in which a violation occurred (not to exceed six years).
The revised Act clarifies that a “cause of action occurs” when any of the following occur: (1) an alleged unlawful compensation decision or other practice is adopted; (2) an individual becomes subject to an alleged unlawful compensation decision or other practice; or (3) 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.
Updated definitions of “Wages” and “Wage Rates”
The Equal Pay Act now specifies what is included in “wages” and “wage rates”. Specifically, these terms contemplate 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
Your next steps
The obligations under the Equal Pay Act already are many and somewhat confusing. This clarification helps, but simultaneously adds new obligations for employers.
- Make sure you have a clear understanding of what you are required to include in your job postings, and what you are required to provide employees. We are happy to collaborate on this with you.
- Next, make sure you are accurate in your postings. Be sure that in listing your pay scales you are careful to confirm that you are including the range that you reasonably expect to pay for the position upon hire.
- We recommend you regularly audit your pay practices to ensure that you are in compliance with the Equal Pay Act’s obligations to pay employees at wage rates no less than the rates paid to employees of the opposite sex for substantially similar work performed under similar working conditions. In doing so, be sure you are relying on the latest definition of sex.
Again, we know this can be a confusing process, so please reach out if we can assist.
