5 Things to Know About the Equal Pay Act in California After Disney’s $43.25 Million Settlement

Pay differences can be hard to spot. Two people might share a job title, work similar hours, and handle the same tasks, yet one earns thousands of dollars more each year. 

Is that fair? More importantly, is it legal?

California law gives workers tools to challenge certain pay gaps. For employees who suspect unfair treatment, understanding the Equal Pay Act in California can help them ask better questions and protect their rights. Blair & Ramirez LLP helps Californians understand their legal options and the steps they can take when workplace practices raise legal concerns.

The issue has reached some of the biggest names in business. In September 2025, a Los Angeles court approved a $43.25 million settlement in a gender pay discrimination lawsuit involving Disney. The case shows why pay practices deserve a closer look, even at major companies.

Read about the Disney settlement.

California Labor Code Section 1197.5 prohibits employers from paying workers less than employees of another sex, race, or ethnicity for substantially similar work under similar working conditions, unless a lawful defense justifies the difference.

What does substantially similar work mean? The law looks at three main factors: skill, effort, and responsibility. Job titles alone do not decide the issue. A marketing coordinator and a marketing specialist, for example, might perform substantially similar work even if their titles differ.

The law covers salary, bonuses, stock options, benefits, and other forms of compensation. It also applies across an employer’s business, rather than only within one physical office.

Employers can defend a pay difference through a seniority system, merit system, production-based system, or another lawful, job-related factor that meets the statute’s requirements. They must show that the factor explains the entire difference.

A useful court case: In Contreras v. Green Thumb Produce, Inc., decided December 15, 2025, California’s Fourth District Court of Appeal examined an employee’s complaint about unequal wages. The court stressed that the Equal Pay Act does not prohibit every pay difference; the difference must relate to a protected characteristic.

Read the published opinion.

A gender pay gap lawsuit in California can start with a simple question: why does a coworker earn more for substantially similar work?

That question helped bring the Disney case to public attention. LaRonda Rasmussen filed a lawsuit in 2019 after learning that male colleagues with the same job title earned more than she did. The lawsuit later grew to include thousands of female employees who alleged that Disney’s compensation practices disadvantaged women.

The plaintiffs challenged, among other things, the use of prior salary in setting starting pay. They argued that this practice could carry earlier pay gaps into new jobs. Disney disputed the allegations, and the parties eventually agreed to a $43.25 million settlement. The Los Angeles Superior Court granted final approval in September 2025.

The agreement also included measures to review compensation practices. It resolved the claims without a trial verdict establishing that Disney violated the law.

What can workers learn from this case? A pay gap can affect more than one employee. When a company uses the same compensation rules across many departments, those rules deserve careful review.

You do not need to know every detail of a coworker’s paycheck before asking questions. But a strong claim needs facts, not just a feeling that something is wrong.

• Start with your own records. 
• Save pay stubs, offer letters, performance reviews, bonus details, job descriptions, and emails about compensation. 
• Write down how your duties compare with those of coworkers doing similar work. 
• And keep notes about dates, meetings, and explanations management gives for pay differences.

The Contreras case (reviewed above) offers another important lesson. Contreras believed his employer had broken equal-pay law, although he did not believe the difference stemmed from sex, race, or ethnicity. After he raised the issue, Green Thumb Produce fired him. A jury found in his favor on several claims, but the trial court later removed the whistleblower claim from the judgment.

In December 2025, the Court of Appeal reversed that ruling. It held that an employee’s objectively reasonable belief about a legal violation can support a whistleblower claim even when the employee misunderstands the law. The ruling concerned retaliation, not a finding that Green Thumb violated the Equal Pay Act. Read the decision.

If an employer violates California’s Equal Pay Act, the financial consequences can extend beyond the difference in hourly wages.

Under Labor Code Section 1197.5, an employee who proves a claim can recover unpaid wages, interest, and an additional equal amount as liquidated damages. A successful civil action can also include reasonable attorney’s fees and court costs.

Consider a worker who earns $5,000 less per year than a comparable coworker because of an unlawful pay practice. That gap can add up over several years. The final amount depends on the evidence, the period covered by the claim, and the applicable law.

The Disney settlement shows how a dispute involving many employees can lead to a large collective resolution. But it involved negotiated settlement terms, not a court’s calculation of damages after a trial. Past results do not guarantee or predict a similar outcome in future cases. Each case is different and must be evaluated on its own facts and circumstances.

California’s statute generally sets a three-year deadline for bringing a civil action to recover wages, while allowing recovery for the period in which a violation existed up to six years. The exact deadline and recoverable period depend on the claim and its facts, so workers should verify the rules that apply to their situation.

What happens when an employer cannot explain a pay gap? Workers can explore a complaint through California’s Labor Commissioner’s Office, which investigates Equal Pay Act claims. Depending on the facts, the California Civil Rights Department may also be relevant.

A worker can begin by gathering records and reviewing the state’s official guidance. The Labor Commissioner’s Office explains how to file a claim, what information to provide, and what remedies may be available.

Employees also have protection against retaliation for exercising their equal-pay rights. California law protects workers who discuss wages, ask about pay, or help others exercise their rights. An employer cannot lawfully punish an employee simply for engaging in protected activity.

The Contreras decision reinforces the importance of this protection. It shows why the details of a retaliation claim matter, even when the employee’s understanding of the underlying pay law is imperfect.

For official instructions, visit the California Labor Commissioner’s Equal Pay Act page.

• California law protects workers from certain pay gaps based on sex, race, or ethnicity for substantially similar work.
• Job titles alone do not determine whether two jobs are substantially similar.
• Pay stubs, job descriptions, reviews, and written communications can help support a claim.
• Eligible workers may recover unpaid wages, interest, liquidated damages, and certain legal costs.
• Workers can report suspected violations and have legal protections against retaliation.

Pay differences deserve answers. When two employees perform substantially similar work, they should not have to guess why one earns less or fear speaking up about it.

Blair & Ramirez LLP can help Californians understand the laws that govern workplace pay, review the facts behind a suspected disparity, and explore available legal options. If you have concerns about unequal wages or retaliation after raising them, reach out to Blair & Ramirez LLP to request a consultation and discuss your situation.