A recent class action lawsuit brought by female employees at a global entertainment organization alleged that the company violated California’s Equal Pay Act by paying women substantially less than their male counterparts. A Los Angeles state judge granted the final approval of a $43.25 million settlement to pay discrimination claims. The judge also granted $14 million in attorney fees.
The settlement marks an end to a six-year litigation battle, but more payments may still be owed to the employees impacted. The company has agreed to have an outside labor economist conduct a pay equity audit for the next three years and address any disparities.
The case underscores the significant financial and reputational risks companies face when pay disparities go unaddressed. For California employers, this case serves as a clear reminder: regular pay equity audits are not just a best practice—they are increasingly a critical part of compliance with state law.
Why A Proactive Pay Analysis Matters
California’s Equal Pay Act is one of the nation’s strongest pay equity laws, requiring equal pay for “substantially similar work.” Violations can result in penalties, including up to millions of dollars in back pay and legal fees. Employers can mitigate risk by conducting a proactive pay analysis that creates a defensible record, corrects disparities based on gender, race, or ethnicity, and helps prevent costly litigation or investigations by agencies like the California Civil Rights Department.
A comprehensive review also helps drive strategic insights by revealing deeper organizational issues such as pay compression, misaligned job classifications, or unconscious manager bias. These insights go beyond compliance to support more equitable and data-driven compensation decisions.
A proactive pay analysis is also critical to ensure compliance with California reporting obligations. Under Section 432.3 of the California Labor Code, employers with fifteen or more employees must disclose pay ranges in job postings and provide pay scale information to current employees upon request. Reviewing pay structures in advance ensures pay bands are equitable and legally sound before public disclosure.
Finally, organizations that act to drive organizational performance through visible pay equity initiatives position themselves as fair, ethical leaders—an advantage in attracting and retaining top talent. Beyond mitigating legal risk, these actions foster transparency, trust, and a stronger workplace culture that benefits both employees and the organization.
How Employers Council Can Help Employers Build Fair and Compliant Pay Practices
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Comprehensive Job Evaluation: We work extensively with members to group positions engaged in equal or comparable work, based on skill, effort, qualifications, responsibility, and working conditions.
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Advanced Data Analysis: Using multivariate salary regression and other statistical methods, we detect and forecast potential compensation gaps across employee groups.
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Rigorous Legal Review: Our team examines potential justifications for identified pay differences to ensure defensibility and compliance with federal and state law.
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Tailored Recommendations and Legal Advice: We provide strategic guidance and legal advice customized to your organization’s specific business needs and workforce structure.
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Actionable Reporting: Members may receive a detailed narrative report identifying any potential disparity indicators, along with relevant policy considerations and recommended best practices.
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Strategic Workforce Advantage: By leveraging our analysis, companies can align pay practices with business objectives, enhance transparency, support talent retention, and foster a culture of trust and equity.
Proactively analyzing salaries helps reduce litigation risk, ensure fair treatment, and strengthen workplace equity. For more information on California employment law support, Employers Council members can contact our California Legal Services team at CAinfo@employerscouncil.org. For more information on Employers Council’s pay equity services, please contact us at aaps@employerscouncil.org
This article reflects insights from Kimberly Landin, Sr. Affirmative Action Pay Equity Specialist and Brittanie Young, Human Resources Consultant, both with Employers Council, who collaborated on its development.
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