September 30, 2022

California Set to Join Colorado on Pay Transparency

With the swipe of a pen California joins Colorado and several other states in enacting pay transparency laws requiring employers to provide additional pay-related data to applicants and employees.

Set to take effect January 1, 2023, SB 1162 will require employers to disclose additional pay-related data, including providing pay ranges on job postings and to those employees who request such information.

The new law also includes changes to employer pay data reporting obligations.

SB 1162 mandates the following changes:

Pay Data Reporting:

  • Employers with 100+ employees must submit a pay data report to the California Civil Rights Department. This includes employers with 100+ employees hired through a labor contractor.
  • Revises the timeframe in which an employer must submit its pay data report to a date on or before May 10, 2023, and for each year thereafter on or before the second Wednesday of May.
  • Requires pay data reports to include median and mean hourly rate for each combination of race, ethnicity, and sex within each job category.
  • Omits existing provisions requiring employers with multiple establishments to submit a consolidated report and those authorizing an employer to submit an EEO-1 in lieu of a pay data report.
  • Provides for significant penalties for an employer’s failure to file the required report (i.e., civil penalty not to exceed $100 per employee for initial failure and not to exceed $200 per employee for a subsequent failure).[i]

Employers should calendar the revised pay data reporting dates to avoid late filings. Those accustomed to filing consolidated reports or an EEO-1 in lieu of a pay data report should begin preparing for new and/or multi-reporting obligations.

Pay Scale Requirements:

  • All employers – upon request – must provide the pay scale for the position in which an employee is currently employed.
  • Employers with 15+ employees must include the pay scale for a position in any job posting.[ii]

Employers should begin modifying existing job postings to include pay scale information and begin preparations to include pay scale information in all job postings beginning January 1, 2023.

No Publication Requirement

One requirement initially included in the bill, however, did not survive the legislative process.  While SB 1162 proposed that the Civil Rights Department publish employers’ pay data on a public website, an amendment removed the public disclosure requirement.  As amended, the Department will only be allowed to publish “aggregate” reports that do not associate the pay data with individual employers.

[i] Penalties will be deposited in the Civil Rights Enforcement and Litigation Fund.

[ii] This includes postings made through third parties who announce, post, publish, or otherwise make known a job posting.