California Implements "Pink Tax" Law Prohibiting Gender-Based Pricing for Substantially Similar Products
Published on 13 Dec 2022
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California, USA (National/Federal)
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by Practical Law Commercial Transactions
PRACTICAL LAW
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13 Dec 2022
California Governor Gavin Newsom signed AB 1287 into law on September 27, 2022, which prohibits higher prices for substantially similar products based on gender, which is often referred to as a "pink tax." The new law only allows for price differences when there is a significant difference in the cost or time to produce a particular good.
Starting January 1, 2023, California will implement a law codified at California Civil Code § 51.14 that prohibits charging a different price for any two goods that are substantially similar if those goods are priced differently based on the gender of the individuals for whom the goods are marketed and intended, often referred to as a "pink tax" ("Pink Tax law"). Signed into law by Governor Gavin Newsom on September 27, 2022, the Pink Tax law broadens the scope of the state's existing gender-based pricing discrimination laws:
The Gender Tax Repeal Act of 1995, which prohibits discriminating with respect to the price charged for services of similar or like kind, against a person because of the person's gender (California Civil Code § 51.6). The Pink Tax law expands on price differences to focus on the product.
The Pink Tax law applies to any business in California, including, but not limited to, retailers, suppliers, manufacturers, and distributors, that sells goods. The law defines "goods" as consumer products used, bought, or rendered primarily for personal, family, or household purposes.
Substantially Similar Goods
The Pink Tax law defines "substantially similar" as two goods that exhibit all of the following characteristics:
There are no substantial differences in the materials used in production.
The intended use is similar.
The functional design and features are similar.
The brand is the same or both brands are owned by the same individual or entity.
Examples of products that may be substantially similar include deodorants, lotions, shampoos, and shaving razors. In some cases, these products may be exactly the same for women and men, except for different packaging and labels.
Legal Price Differences
Sellers of products and services can ensure price differences do not violate the new law if based on the following:
The amount of time it took to manufacture the goods.
The difficulty in manufacturing those goods.
The cost incurred in manufacturing those goods.
The labor used in manufacturing those goods.
The materials used in manufacturing those goods.
Any other gender-neutral reason for charging a different price for those goods.
Enforcement
As is the case in New York, enforcement of the Pink Tax law is limited to the state attorney general, who may, upon prior notice to the defendant, seek a court order to enjoin and restrain the continuance of violations. The new law does not expressly provide for a private right of action.
Companies that violate the new law face penalties much greater than those allowed by New York's law against gender-based pricing:
A civil penalty up to $10,000 for an initial violation.
$1,000 for every subsequent violation, with the total penalty not to exceed $100,000.
Each instance of charging a different price for two substantially similar goods is considered a single violation.
Courts may impose additional civil penalties beyond the $100,000 maximum if a defendant subsequently violates the Pink Tax law:
With regard to the same goods for which the maximum penalty had been previously imposed under a separate civil action.
For any good for which the attorney general has not brought a civil action under the Pink Tax law.
End of Document
Resource ID w-037-9037Document Type Legal update: archive
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PLC US Commercial Transactions, PLC US Law Department