California’s new “Pink Tax Law,” Cal. Civ. Code § 51.14, which prohibits charging a higher price to one gender vs. another for similar services, takes effect on Jan. 1, 2023. On paper, California’s law resembles a New York law, Gen. Bus. Law § 391-u, that has been on the books for more than two years. In practice, the breadth of California’s Unfair Competition Law is likely to yield a bevy of cases testing the boundaries of the Pink Tax Law, with consumer products companies and retailers as the unfortunate victims of these tests.
The Pink Tax Law prohibits businesses from “charg[ing] 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.” The law considers two items to be “substantially similar” if (1) there are no substantial differences in the materials used to produce them, (2) the intended use is similar, (3) the functional design and features are similar, and (4) the brand is the same or both brands are commonly owned. Defenses that might justify higher prices include the amount of time, effort, and cost involved in manufacturing the two products. As a practical matter, however, at least in many cases, these will not be defenses that companies will be able to invoke at the motion to dismiss stage.