Using the 2001-2002 California Workforce Survey, this paper examines the income gap between Hispanic and Caucasian workers. I attribute the income gap between Hispanic and Caucasian workers to differentials in their human capital. However, data analyses indicate that classical human capital indicators such as education,job training, and work experiences are not sufficient to account for the observed income gap between Hispanics and Caucasians. Instead, English fluency is a highly valuable aspect of human capital for Hispanic workers. English non-fluency, along with less education, job training, and work experiences explain why Hispanic workers earn less than Caucasian workers. However, variations in English fluency do not affect the incomes of Asian workers. Those findings suggest that English non-fluency is a unique source of income penalty for Hispanic workers. It may be attributed to stereotyping by employers.