Labor & Employment Law Daily Wrap Up, STATE LEGISLATION—CALIFORNIA—Governor signs bill amending state’s Equal Pay Act, (Oct 10, 2025)

By Brandi O. Brown, J.D.

Now “wages” and “wage rates” will include things such as stock options, bonuses, benefits, and various other allowances and reimbursements.

On Wednesday, California Governor Gavin Newsom signed SB 642, a bill that makes some significant changes to the state’s Equal Pay Act. The revisions will take effect on January 1, 2026. He signed it on “Latina Equal Pay Day,” which occurs on October 8—a date selected to symbolize “how far into the next year a Latina must work to earn what a white, non-Hispanic man earned in the previous year.”

All forms of pay.Among those changes, a definition for “wages” and “wage rates” was added to Calif. Labor Code Section 1197.5, applicable only to that section of the code. Under the new provision, they are defined to “include 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.”

Also, “pay scale,” as used in California Labor Code Section 432.3 and which formerly was defined to mean “the salary or hourly wage range that the employer reasonably expects to pay for the position” now will be defined as meaning “a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire.”

Statute of limitations and continuing violations. One of the other changes made has to do with limitations periods. The bill was sponsored by California Senator Monique Limón, who explains that it harmonizes the statute of limitations with other wage statutes and allowing workers to recover for all lost pay for up to six years. Also, previously the law separated out willful violations as having a three-year limitations period, whereas other violations had a two-year period, but now it states that a civil action to recover wages may be commenced “no later than three years after the last date the cause of action occurs.” It defines a cause of action as follows:

“(3) For purposes of this subdivision, a cause of action occurs when any of the following occur:

(A) An alleged unlawful compensation decision or other practice is adopted.

(B) An individual becomes subject to an alleged unlawful compensation decision or other practice.

(C) 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.

(4) Nothing in this subdivision shall prohibit the application of the doctrine of ‘continuing violation’ or the ‘discovery rule’ to any appropriate claim.”

It also adds a provision indicating that an employee “is entitled to obtain relief for the entire period of time in which a violation of subdivision (a) or (b) exists, but not to exceed six years.”

Finally, the new law defines “sex” in conformity with Government Code Section 12926.

“The Pay Equity Enforcement Act will help narrow the wage gap by providing workers with more negotiation power at the start of their career,” says Limón, “while also strengthening workers’ rights to recover lost wages—this is a win for workers and an even bigger win for California families.”

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