“As goes California, so goes the nation.” Part 2

In 2018, California was the first state to pass pay transparency legislation, which requires employers to provide a salary range for a role if an applicant asks for it after an initial interview. Many states followed suit.  

However, on September 27, 2022, Governor Newsom signed monumental legislation amending California’s current pay reporting and pay transparency laws, SB 1162. While many states have already passed some sort of pay transparency laws, California is only one of two states which will 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 that could potentially work in California. Let’s dig into the new requirements of SB 1162. 

Pay Transparency 

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 beginning January 1, 2023. What does this mean for your organization? 

• Eligible employers will have to post the minimum and maximum salary range (either as an hourly wage or yearly salary amount) in any job posting.  
• 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.  
• Employers will also have to keep records of job title and salary history for each employee for the duration of employment plus three (3) years after employment ends. 
• Employers can face civil penalties of no less than $100 and no more than $10,000 per violation. However, 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.  

Pay Reporting 

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 beginning May 2023. 
• 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 report separate from the typical EEO-1 reporting. 
• Employers can face civil penalties of $100 per employee, and up to $200 per employee, for subsequent failures to file this 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? 

To learn more about how to prepare for pay transparency legislation, be sure to watch the recording of our latest Pay Transparency Legislation webinar. 

To stay up-to-date on the latest pay transparency legislation in the United State, check out our legislation landing page.