Wednesday, February 1, 2023
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California Imposes Better Pay Transparency and Pay Information Necessities

Beginning January 1, 2023, California employers will probably be required to incorporate in job postings the pay vary for the place and to open up to present staff on their request the pay vary for the place they maintain.  Senate Invoice 1162, signed into legislation by Governor Gavin Newsom this week, boldly proclaims California to be the harbinger of higher pay transparency.  The laws additionally drastically expands the data employers should open up to the state of their annual pay knowledge stories.

New Obligations to Disclose Pay Scales

California employers with 15 or extra staff will probably be topic to the brand new requirement that they embody in job postings the pay scale for the place.  The place an employer makes use of a 3rd social gathering to publicize a job posting, the employer will probably be required to provide the pay scale for the place to the third social gathering and embody it within the third social gathering’s posting.

All employers working within the state, no matter measurement, will probably be required to reveal the pay scale of a present worker’s place on request.  SB 1162 doesn’t specify that employers should present the data in writing.  State legislation already in impact requires that employers present candidates the pay scale for the place on the applicant’s “cheap request.”  The requirement regarding candidates continues in impact.

The thought behind such pay transparency mandates is that staff and candidates understanding the place they stand inside a pay vary is critical if they’re to establish pay disparities, that’s, probably illegal circumstances during which employers are paying staff of a specific gender, race or ethnicity lower than their friends. 

SB 1162 authorizes the Labor Commissioner to simply accept complaints of violations and award civil penalties in opposition to employers starting from $100 to $10,000 per violation.  Workers and candidates are additionally licensed to sue employers in Superior Courtroom for violations.

Provided that the brand new pay transparency necessities will probably be set out within the Labor Code, it seems that alleged violations will probably be one more foundation for workers and former staff to sue beneath the California Non-public Attorneys Normal Act (PAGA).  In reality, SB 1162 is more likely to topic employers to higher publicity by way of PAGA lawsuits than by way of the Labor Commissioner complaints licensed by the brand new laws.

Pay Information Reporting Necessities are Expanded

Underneath current legislation, California employers of 100 or extra staff are required to file with the state an annual report detailing the variety of their staff by race, ethnicity and gender in every of 10 job classes.  SB 1162 provides a brand new requirement that employers with 100 or extra staff obtained by way of labor contractors (e.g., temp businesses) within the prior calendar 12 months will probably be required to file a separate pay knowledge report protecting the employees obtained by way of labor contractors.  These stories should additionally embody the names of the house owners of the labor contractor firm.

The brand new pay knowledge stories additionally should embody, inside every of the ten job classes, for every mixture of race, ethnicity and gender, the median and imply hourly fee of pay.

California employers should file their first pay knowledge report complying with the brand new necessities no later than the Might 10, 2023.  In every subsequent 12 months, employers should file their report no later than the second Wednesday in Might.  Pay knowledge stories should be filed with the California Civil Rights Division (CRD), previously named the Division of Truthful Employment and Housing.

SB 1162 eliminates employers’ present capability to fulfill the state submitting requirement by submitting with California their federal EEO-1 Reviews. 

A civil penalty of as much as $100 per worker could also be awarded in opposition to employers in violation of the pay knowledge reporting necessities.  For subsequent failures to conform, a civil penalty of as much as $200 per worker could also be awarded.

The pay knowledge stories are utilized by the CRD to be able to establish workplaces exhibiting pay disparities by gender, race or ethnicity and, probably, to provoke investigations and enforcement motion.

Early Steps to Think about Taking

Employers might want to contemplate proactive steps together with:

1. If an employer doesn’t have a written pay vary for every place, contemplate getting ready them.  The place an employer doesn’t have a proper pay vary for every place, the chance arises of various supervisors or managers disclosing inconsistent pay scales for a similar place, which, itself, could also be alleged to be proof of discrimination.

2. Practice managers and supervisors how to reply to staff requesting pay ranges.  Designate who will disclose pay scales and the way they’ll accomplish that.

3. Replace recruiting processes to make sure that pay scales are included in job postings.

4. With respect to pay knowledge stories, ensure knowledge is being gathered and will probably be accessible as wanted to arrange stories setting out, inside every of the ten job classes, for every mixture of race, ethnicity and gender, the median and imply hourly fee of pay.

5. Employers who get hold of 100 or extra staff from labor contractors this 12 months ought to start to work with their labor contractors to determine how and when the labor contractors will present the info wanted for employers to arrange their separate pay knowledge stories on such staff.


SB 1162 builds on laws Governor Newsom signed in 2020.  My submit at the moment explaining the preliminary laws is right here.

The textual content of SB 1162 is right here.

If you need assistance on this topic, please attain the creator or your Fox Rothschild LLP counsel.

This submit supplies normal data and doesn’t represent authorized recommendation to any individual with respect to any circumstance.  This submit doesn’t create an attorney-client relationship with any individual.    

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