Job seekers in California will no longer have to take a shot in the dark when asked about their salary expectations. Effective January 1, 2023, employers with fifteen or more employees will soon be required to post the minimum and maximum salary range for any job within the state. The state’s pay transparency law aims to help alleviate sex-based wage disparities by establishing a level field for pay practices.
Since 2018 all employers in California have been required to disclose a position’s pay scale to applicants for employment upon request. While that requirement will remain in place, California’s State Bill 1162 amends Labor Code Section 432.3 and requires that employers with fifteen or more employees also include a pay scale in all job postings, including those posted on third-party platforms. A pay scale is a salary or hourly wage range that the employer reasonably expects to pay for the position.
California is the sixth jurisdiction behind Colorado, Ithaca, NY, Jersey City, NJ, New York City, NY, and Westchester County, NY, requiring wage transparency in job postings. Seven other jurisdictions: Connecticut, Maryland, Nevada, Rhode Island, Washington, Cincinnati, OH, and Toledo, OH, require that employers disclose wage ranges upon request.
California’s new law also places additional pay data reporting requirements on employers to promote greater transparency. By May 10, 2023, employers with 100 or more employees must submit updated pay data reports using 2022 compensation information to the California Civil Rights Department, including mean and median hourly rates by each combination of race, ethnicity, and sex for its workers. In subsequent years, employers must submit the report each year on or before the second Wednesday of May. This law also requires that employers with 100 or more employees hired through labor contractors submit a separate pay data report to the department for those employees.
A records retention requirement was also introduced by State Bill 1162. Under the new law, employers maintain records of a job title and wage rate history for each employee for three years post termination or separation. These records are open to inspection by the California Labor Commissioner.
Employers are advised to adjust their policies and practices to plan for compliance with California’s new law. As pay transparency laws continue to gain traction, companies should review pay equity resources, engage their legal counsel, and consider implementing policies that promote pay transparency across the board as pay transparency laws continue to take hold across the country.
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