Pay transparency is now law in California: what it means for pay reporting

“As goes California, so goes the nation.” 


Pay Transparency Legislation: Passed 8.30.2020 and will be signed by Governor within 12 days   

Implementation: Reporting required May 2023 – Transparency TBD  

On August 30, 2022, California passed monumental legislation surrounding pay reporting and pay transparency. While many states have already passed pay transparency laws, California is only one of two states which require pay reporting. Illinois is the second.  

We know that many states will likely follow California’s lead in these two areas of addressing pay equity, especially since California’s new law will likely apply to employers across the country who hire remote workers and could potentially work in California.  

What is the pay transparency law in California?

Similar to states like Colorado and Washington, California will require employers with 15 or more employees to include a pay range in all job postings. Employers will not face monetary penalties for a first offense only if they can show that all job postings for open positions have been updated to include the pay range.  

Additionally, all employers, regardless of the number of employees, will be required to provide a pay scale for a current employee’s position at the employee’s request. We do not know when the pay transparency law will take effect, but typically new California laws take effect on January 1.  

What is pay reporting law in California?

California employers are already required to report pay data to the California Department of Fair Employment and Housing (the “DFEH”), but the legislature did not think that the current law did enough to expose pay inequities. The new legislation adds the following pay reporting components: 

  • Pay data now has to be reported annually on the second Wednesday of May; 
  • Employers will now have to report the median and mean hourly rate by each combination of race, ethnicity, and sex (current law only requires employers to provide a head count of employees by these protected classes in each job category and pay band); 
  • Employers with 100 or more employees hired through labor contractors will also be subject to these pay reporting requirements in a separate report. 

SB 1162 originally proposed making these pay reports public, but after push back from the business community, this provision was taken out.  

What’s next for pay transparency legislation? 

Join us for a webinar on September 14, 2022, where we will dive further into current pay transparency legislation, including California’s new pay transparency law. We will also talk about how employers can start preparing for these new changes.