The article below provides guidance on California's new SB 642 but should not be taken as legal advice. Always consult with your employment counsel or General Counsel when applying these new legal requirements in your organization.
Welcome to California 2.0, where sunshine pairs nicely with pay transparency and enthusiastic wage enforcement. On October 8, 2025, Governor Gavin Newsom signed SB 642, also known as the Pay Equity Enforcement Act, into law.
Starting January 1, 2026, the state is tightening California pay transparency rules, expanding equal pay protections, and giving employees a longer runway to bring legal claims.
Translation for employers: the excuse of "we didn't realize" just got less believable.
What is SB 642? (In plain, non-legalese English)
Remember 2022, when California and Washington rushed to grab silver and bronze in the pay transparency Olympics behind Colorado?
SB 642 is California's victory lap. It builds on an already aggressive Equal Pay Act and California pay transparency framework by clearing up fuzzy standards, updating outdated definitions, and giving enforcement a much longer memory.
This California wage law touches job postings, compensation structures, equity awards, bonuses, and record-keeping practices. Translation: this is not just recruiting's problem anymore. It's an all-hands-on-deck moment for HR, legal, finance, and anyone who has ever said "we'll fix comp later."
Pay scales must be real (What a concept)
SB 642 tightens what qualifies as a "pay scale." A pay scale must now be a good faith estimate of what the employer reasonably expects to pay upon hire. Where have we heard that before?
That doesn't mean:
- "$90k-$190k depending on experience"
- "Market competitive"
- "DOE + equity"
It does mean a defensible, role-specific range based on actual compensation planning. Actually reviewing reliable data, talking to the hiring manager, running pay equity checks, talking to finance, talking to legal…all that fun cross-functional collaboration.
HR action items (Do this now):
- Audit every job posting template (including recruiter-used drafts)
- Pressure-test salary bands with finance and leadership
- BONUS: Run pay equity checks at this step too
- Document how ranges are set because you may get an auditor who will ask you
Equal pay protections are broader and clearer
SB 642 updates the Equal Pay Act to prohibit paying employees of "another sex" less for substantially similar work. This is an intentional shift that reflects gender-inclusive protections under the new California wage law.
Do your compensation practices rely on legacy assumptions? Do they rely on informal negotiation outcomes? Both are red flags.
More HR action items:
- Stop relying on manager discretion alone (in fact, don't let managers negotiate salaries at all)
- Standardize compensation decision-making across teams
- Train managers on how to explain pay decisions—bonus points if it's in writing
Because under SB 642, your explanation matters a lot.
The look-back period is longer
Employees now have three years from the last violation to file an equal pay claim. Plus, they can recover up to six years of unpaid wages if disparities continued into that window. This California wage law news will drastically increase exposure, especially for companies that scaled quickly or grew by acquisition without revisiting pay bands.
Even more HR action items:
- Conduct a privileged pay equity audit now, in conjunction with your legal counsel
- Focus on comp drift over time, especially after promotions, acquisitions, or re-leveling
"Wages" means everything (including your beloved equity grants)
SB 642 clarifies that "wages" now include the following:
- Base pay
- Bonuses and commissions
- Stock options and equity awards
- Profit sharing
- Benefits (vacation, insurance, reimbursements)
More HR action items?!
- Inventory all forms of compensation, not just salary
- Align equity grant practices with job level and role, not negotiation prowess
- Loop in total rewards teams early, in conjunction with HR teams
What HR teams should be doing right away
1. Run a pay equity audit
Don't wait for a complaint to discover problems.
2. Fix job architecture
Clear levels, consistent titles, and aligned bands reduce risk and improve recruiting.
3. Train recruiters and hiring managers
Make sure everyone understands California pay transparency requirements and what constitutes a compliant pay scale.
4. Update record-retention policies
Plan to retain compensation and job records for at least 6 years.
5. Get legal involved early
This isn't an HR-only initiative — California wage law compliance requires cross-functional collaboration.
Bottom line for HR and Legal teams
SB 642 is a reminder that pay transparency and equity are no longer "nice to have" — they're enforceable obligations. With broader equal pay protections, longer look-back periods, and stricter pay scale requirements, California wage law news for 2026 signals that the state is serious about enforcement.
The time to get compliant isn't later. It's now.
Need help navigating California's new pay transparency requirements?
Payscale equips HR teams to not only quickly identify pay equity issues but also model remediation scenarios — closing gaps without breaking your budget.
