The City of San Diego joined a growing list of state and local jurisdictions by enacting a pay equity ordinance on July 31, 2017.  

The Equal Pay Ordinance requires city contractors to certify in writing that they will comply with the California Equal Pay Act (California Labor Code Section 1197.5) for the duration of the contract. The state law prohibits pay discrimination based on gender, race, or ethnicity. City contractors must comply with this state law and must certify compliance through entering into the contract. Contractors must also post a notice of rights at the job site and must keep wage records demonstrating compliance with the state law.

The ordinance applies to all city contractors receiving grants, or providing goods, services, construction, leased property, or consulting to the City of San Diego, with certain exceptions. Exceptions include small contractors with 12 or fewer employees, sole contracts, cooperative procurement contracts, public works contracts of $500,000 or less, and intellectual property licensing contracts. The law will apply to all contracts awarded or extended on or after January 1, 2018.

The city may conduct audits of its contractors and issue notices of violations. A contractor will have 30 days upon notice to cure the violation. The ordinance gives the city authority to cancel, terminate, or suspend a contract in whole or in part, in addition to pursuing any other remedies allowed in the municipal code.

The City of San Diego already generally bans discriminatory practices by city contractors. The city’s Equal Employment Opportunity Outreach Program prohibits contractor discrimination based on state and federal law equal employment opportunity (EEO) categories. That ordinance requires contractors to include a contractual term acknowledging their non-discriminatory practices, and also to submit a compliance report to the applicable city program manager.

San Diego’s pay equity ordinance follows on the heels of the San Francisco Parity in Pay Ordinance, signed into law on July 19, 2017. That ordinance prohibits employers in the city of San Francisco from asking job applicants about their salary histories or from considering earnings information in making hiring decisions or setting starting pay. That ordinance will take effect on July 1, 2018. San Francisco also enacted an equal pay ordinance in 2014, requiring that city contractors pay employees without regard to numerous EEO categories.

The City of San Diego Equal Pay Ordinance requires city contractors to comply with existing state law, which these businesses were already required to do. However, the Equal Pay Ordinance also imposes new posting, certification, recordkeeping, and other compliance obligations. Additionally, the ordinance provides new enforcement remedies, including contract termination, when a contractor is found to be out of compliance with state law.