California Equal Pay Act: 2026 Changes Double Employer Exposure

Effective January 1, 2026, SB 642 significantly increases employer exposure by broadening the definition of “wages,” extending the limitations period, and expanding recoverable damages.

Key developments in equal pay law:

2016: The Fair Pay Act replaced the “equal work” standard with “substantially similar work” and tightened the bona fide factor defense.

2017–2018: Protections expanded to race and ethnicity. Employers were prohibited from relying on salary history and generally may not ask applicants about prior pay.

2023: Employers with 15 or more employees must include pay scales in job postings, including remote positions that could be filled in California.

2026 (SB 642): “Wages” now includes virtually all compensation, including bonuses, equity, benefits, and allowances. The statute of limitations extends to three years, and plaintiffs may recover up to six years of unpaid compensation.

If there is any question whether your business is compliant with this law, we recommend you:
• Conduct a privileged pay equity audit covering total compensation, not just base salary.
• Verify that all job postings include compliant pay scales.
• Ensure any pay differential is fully explained by a lawful factor, not just partially justified.