California Senate Bill 1162, recently signed by Gov. Gavin Newsom, is a broad pay transparency law that requires employers to include pay ranges in all job ads as of Jan. 1, 2023 – a measure that is intended to close the pay gap and prevent unlawful employment discrimination.
Pay transparency employment law is a catching trend. In addition to California, other states like Nevada, Colorado, Washington, Connecticut, Maryland, and Rhode Island do as well. New York passed a similar measure too, but it’s awaiting the governor’s signature (though New York City has its own pay transparency law).
As our Los Angeles employment lawyers can explain, publication of pay for various jobs is supposed to reduce or eliminate discrepancies in pay. It’s effective in this because it brings to light information that employers have historically wished to keep under wraps. (If you encourage employees to stay hush-hush about their salaries because it’s “impolite” or “against company policy” or a “company trade secret,” there’s less chance of them learning if some groups are being unfairly discriminated against in their pay.) It can help employee plaintiffs more easily make their case when pay disparities are clearly spelled out in black-and-white. And by posting the salary upfront in job ads, employers may be less likely to engage in discrimination by low-balling a prospective employee in starting pay on the basis of their protected status (be that race, religion, gender identity, national origin, disability, sexual orientation, age, etc.).
It is against existing law for companies to communicate with other employees about wages – per the National Labor Relations Act and California Labor Code Sections 232(a) and (b).
Some other breakdowns of California’s new pay transparency law:
- Job postings must have a pay scale. Companies employing 15 or more workers must tack on the pay scale for any advertised job post – both internal and external. If the employer is working with a third party to make the job posting, the employer has to provide the pay scale to that third party, who must then tack it on to the ad. California Labor Code Section 432.3 defines “pay scale” as hourly wage range or salary. It doesn’t include things like equity or bonus, etc.
- Release of pay scale information on request. If an employee requests the pay scale for the position they currently hold, the law requires the employer to provide it.
- Enforcement of pay disparities. If an employer fails to include a pay scale on job ads, the Lavor Commissioner should investigate and can impose fines between $100 to $10,000 per violation. Anyone adversely impacted by failure to post pay scales can sue. Employers are required to keep documentation on wage rate history and job titles for every employee for the duration of their employment – and keep it for at least three years post-employment. If the employer can’t produce those records, it creates a rebuttable presumption in favor of the complainant employee.
- Broader pay information reporting. Private employers that have 100+ employees (at least one of those in California) are required to submit pay data to the California Civil Rights Department (previously the Department of Fair Employment and Housing). These reports have to include the median and mean hourly rates for each combination of race, ethnicity, and sex of each worker in every job category. Companies who hire 100+ workers through third-party labor contractors are subject to the law as well.
If you believe your employer or a prospective employer to be in violation of this new California labor law, our dedicated Los Angeles employment attorneys are available to answer your questions.
Contact the employment attorneys at Nassiri Law Group, practicing in Newport Beach, Riverside and Los Angeles. Call 714-937-2020.