Tuesday, October 4, 2022
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California Imposes Larger Pay Transparency and Pay Information Necessities

Beginning January 1, 2023, California employers might be required to incorporate in job postings the pay vary for the place and to speak in confidence to present workers on their request the pay vary for the place they maintain.  Senate Invoice 1162, signed into regulation 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 speak in confidence to the state of their annual pay information experiences.

New Obligations to Disclose Pay Scales

California employers with 15 or extra workers might 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 get together to publicize a job posting, the employer might be required to provide the pay scale for the place to the third get together and embody it within the third get together’s posting.

All employers working within the state, no matter measurement, might 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 regulation 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 workers and candidates understanding the place they stand inside a pay vary is important if they’re to determine pay disparities, that’s, doubtlessly illegal circumstances through which employers are paying workers of a selected 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.  Staff and candidates are additionally approved to sue employers in Superior Courtroom for violations.

Provided that the brand new pay transparency necessities might be set out within the Labor Code, it seems that alleged violations might be yet one more foundation for workers and former workers to sue below the California Non-public Attorneys Normal Act (PAGA).  Actually, SB 1162 is more likely to topic employers to higher publicity by means of PAGA lawsuits than by means of the Labor Commissioner complaints approved by the brand new laws.

Pay Information Reporting Necessities are Expanded

Beneath current regulation, California employers of 100 or extra workers are required to file with the state an annual report detailing the variety of their workers by race, ethnicity and gender in every of 10 job classes.  SB 1162 provides a brand new requirement that employers with 100 or extra employees obtained by means of labor contractors (e.g., temp businesses) within the prior calendar yr might be required to file a separate pay information report overlaying the employees obtained by means of labor contractors.  These experiences should additionally embody the names of the homeowners of the labor contractor firm.

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

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

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

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

The pay information experiences are utilized by the CRD with the intention to determine workplaces exhibiting pay disparities by gender, race or ethnicity and, doubtlessly, to provoke investigations and enforcement motion.

Early Steps to Take into account Taking

Employers might want to think about proactive steps together with:

1. If an employer doesn’t have a written pay vary for every place, think about making 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. Prepare managers and supervisors how to reply to workers requesting pay ranges.  Designate who will disclose pay scales and the way they may accomplish that.

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

4. With respect to pay information experiences, be sure information is being gathered and might be accessible as wanted to organize experiences setting out, inside every of the ten job classes, for every mixture of race, ethnicity and gender, the median and imply hourly price of pay.

5. Employers who acquire 100 or extra employees from labor contractors this yr ought to start to work with their labor contractors to resolve how and when the labor contractors will present the info wanted for employers to organize their separate pay information experiences on such employees.


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

This submit gives common 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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