What California’s New Pay Equity Laws Mean for Discrimination Claims
California has long been a leader in protecting workers from discrimination, and new changes taking effect in 2026 further strengthen those protections, especially when it comes to unequal pay. Under legislation signed by Gavin Newsom, SB 642 expands California’s pay equity and transparency laws in ways that give employees stronger tools to identify, challenge, and prove pay discrimination.
For employees who suspect they are being underpaid, or who have faced retaliation for raising concerns, these changes matter.
Stronger, More Inclusive Protections Against Pay Discrimination
One of the most important updates under SB 642 is the expanded definition of “sex” for pay equity claims. The law clarifies that protections extend beyond traditional categories and include gender identity, gender expression, and related characteristics. This broader definition ensures that more workers are covered and that pay disparities affecting LGBTQ+ employees are evaluated under a clearer legal framework.
Just as significant is the law’s expanded definition of “wages.” Under SB 642, compensation is not limited to base salary or hourly pay. Bonuses, commissions, incentive pay, equity compensation, and other forms of remuneration must also be considered when determining whether employees are paid equally for substantially similar work.
This closes a common loophole where unequal pay is hidden in discretionary bonuses or incentive structures, areas where bias can easily go unchecked.
Why Pay Transparency Matters for Employees
SB 642 also enhances California’s pay data reporting requirements. While employers submit this information to state agencies, the broader goal is accountability. These reports help regulators identify patterns of pay disparities across gender and other protected characteristics.
For employees, increased transparency can be powerful. Pay data can uncover systemic inequities that might otherwise remain invisible, especially in workplaces where discussing compensation has historically been discouraged. In discrimination and wrongful termination cases, this data may serve as critical evidence supporting claims of unequal treatment.
How These Changes Strengthen Discrimination and Retaliation Claims
Taken together, SB 642 makes it easier for employees to bring and support pay discrimination claims. Broader definitions mean fewer technical barriers to protection. Expanded wage categories make it harder for employers to justify disparities by pointing only to base pay. And increased reporting creates documentation that may reveal patterns of inequality rather than isolated incidents.
These changes are especially important for employees who experience retaliation after raising pay concerns. If an employee is terminated, demoted, or otherwise punished after questioning compensation practices, SB 642’s expanded framework can help connect the dots between unequal pay and unlawful retaliation.
What Employees Should Know For 2026
If you believe you were paid less than coworkers for similar work, or faced adverse action after speaking up, California’s expanded pay equity laws may strengthen your legal options. As these laws evolve, understanding your rights is essential.
If something feels off about your pay or how your employer responded when you raised concerns, it may be worth seeking legal guidance. Proactive action can help protect your rights and hold employers accountable. Contact us today to learn more!