New California Pay Disclosure Requirements
On September 27, 2022, California Governor Gavin Newsom signed Senate Bill 1162 which will go into effect on January 1, 2023. This new bill is a broad pay transparency law which will affect all employers.
Pay Scale Disclosure Requirements
Under this new law, employers with 15 or more employees will now have to include the pay scale or “salary or hourly wage range that the employer reasonably expects to pay for the position” in every job posting. Employers should keep in mind that this requirement is for every job posting, whether it is made by the employer or by a third-party job-posting website.
While under the existing California law, employers were required to provide the pay scale upon request of an applicant who completed an interview, Senate Bill 1162 includes current employees to this requirement as well. This means that all covered employees will have the right to request the pay scale information for their currently held job position from all employers, regardless of their size.
Senate Bill 1162 also requires all employers, regardless of size, to retain records which show an employee’s job title and wage history as long as they are employed as well as for at least three years after their employment ends. The purpose of this is to keep these records open for the Labor Commissioner to inspect. The refusal or failure to keep these records creates a rebuttable presumption in favor of an employee’s claim against the employer.
Pay Data Reporting
This bill also expands the current California law regarding pay data reporting. Private employers with more than 100 employees must now submit an annual report with the Civil Rights Department which discloses pay data according to race, ethnicity, and gender in certain job categories. These Job categories include:
- Executive or senior level officials and managers
- First, or mid-level officials and managers
- Sales Workers
- Administrative Support Workers
- Craft Workers
- Laborers and Helpers
- Service Workers
The information which must be reported for the above listed job categories includes:
- The number of employees by race, ethnicity, and sex
- The median and mean hourly rates
- The number of employees by race, ethnicity, and gender whose annual earnings fall within each of the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics Survey
- The total number of hours worked by each employee counted in each pay band during the reporting year
- The employers North American Industry Classification System Code
These reports must be submitted by the second Wednesday in May (May 10, 2023) and the failure to timely submit these reports can lead to significant civil penalties.
California employers should keep SB 1162 in mind for future hiring processes and determine whether their policies and procedures for record retention need to be updated.