Just in time for the new year, California employers finally received some clarity about their obligations under California’s new pay transparency law, which goes into effect on January 1, 2023. As discussed in more detail here, SB 1162 not only expands pay data reporting requirements for California employers with 100 or more employees, but the new law also requires employers with 15 or more employees to include the pay scale for a position in any job posting. As the deadline for compliance grew near, many employers questioned whether and how the new law might impact their workforce. Thankfully, the California Labor Commissioner has answered some of those questions as they relate to disclosing “pay scales” to applicants and current employees:
- Which employers are covered? Employers with 15 or more employees are covered by the new law. Whether or not an employer meets the “15 or more employees” threshold now aligns with the Labor Commissioner’s method for counting employees for the purpose of 2022 COVID-19 Supplemental Paid Sick Leave and minimum wage rates. In other words, the 15-employee threshold applies when an employer reaches 15 employees at any point in a pay period. Importantly, an employer with 15 or more employees need have only one employee currently located in California in order for the law to apply. While bone fide independent contractors are excluded when counting employees, exempt employees, part-time workers, minors, and new hires are all included when determining whether this threshold is met.
- How is a “Pay Scale” determined? The definition of “Pay Scale” has been clarified as the salary or hourly wage range that the employer reasonably expects to pay for the position, excluding bonuses, commissions, tips, or other benefits. However, if a position’s salary or hourly wage is based on either commission or a piece rate, then the commission range or piece rate the employer reasonably expects to pay for the position must also be included in the job posting.
- Which postings required pay scale disclosures? The Labor Commissioner’s Office has also clarified that the “pay scale” must be included within a job posting if the position may ever be filled in California, either in-person or remotely.
- How must the information be presented on the posting? The “pay scale” information must visibly appear in the job posting itself (i.e. no link or QR code may be used as a substitute for including the wage information in the job posting).
- What records must be kept? An employer must keep records of job title and wage rate history for each employee for the duration of the employment plus three years after the end of the employment. These records are subject to inspection by the Labor Commissioner to determine if there is a pattern of wage discrepancy.
- What are the possible consequences of non-compliance? Complaints concerning pay transparency violations may be brought either to the Labor Commissioner or in a civil action for injunctive or other relief in court. An employer found in violation of the law may be subject to civil penalties of no less than $100 and no more than $10,000 per violation. Employers are prohibited from retaliating against an employee for any action taken by the employee to invoke or assist in any manner with enforcement of the Act.
Full Text of the Updated FAQs can be found here (specifically FAQ Nos. 29-40). Although this new information provides some additional clarity for employers, other areas of the new law (such as what constitutes a “reasonable” pay range for any given position) have yet to be tested. In addition, multi-state employers should also take into account pay transparency laws in Colorado, Connecticut, Maryland, New York, New Jersey, Nevada, Ohio, Rhode Island, and Washington when preparing to fill open positions.