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California's new Fair Pay Act has companies scrambling

The new year always means a slate of new state laws. One of the most significant, from a business perspective, may be California’s new Fair Pay Act. It's been called one of the toughest equal pay laws in the country.

"It has very strong anti-retaliation provisions," Noreen Farrell said, executive director of Equal Rights Advocates, which helped push the legislation. That means co-workers can talk to each other about their salaries, without getting in trouble with the boss.

The law also says men and women should be paid the same for “substantially similar” work.

"So this law makes clear that you look beyond job titles at what people actually do," Farrell said.

And the law says differences in pay must be explainable by factors like seniority and merit.

Some companies in California have been scrambling to make sure they are in compliance. They've undertaken deep-dive analyses of their payrolls, a task "that requires developing appropriate employee groupings, isolating factors that explain pay," said Kristina Launey, a partner at law firm Seyfarth Shaw.

Launey says companies also have to train HR, as well as document and keep track of  all pay decisions.

It’s not a cheap undertaking, especially for companies with complex pay and employment structures. But, advocates say, it could help close the lingering pay gap between women and men.

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