New Guidance on California’s Pay Disclosure Law

Employment Law

To help guide employers toward compliance with the state’s expanded pay disclosure law, the released FAQ guidance.

In 2020, California enacted a reporting obligation for private employers with 100 or more employees that file the federal annual Employer Information Report (EEO-1) to include pay data information in a report to the Department of Fair Employment and Housing (DFEH) (now called the California Civil Rights Department).

The initial iteration of the law required employers to share the number of employees categorized by race, ethnicity and sex categorized by position: officials and managers, professionals, technicians, sales workers, administrative support workers, craft workers, operatives, laborers and helpers, and service workers.

Last year, state lawmakers enacted a measure to expand the requirements, including the need to include a pay scale in all job postings.

Taking effect as of January 1, 2023, Senate Bill 1162 now mandates that within each job category, employers must share the median and mean hourly rate by each combination of race, ethnicity and sex. The deadline to submit the data has moved to the second Wednesday of May each year.

In addition, employers with more than 15 employees now need to include a pay scale in all job postings, and all employers—regardless of the number of employees—are required to provide the pay scale for a current employee’s position upon request.

If a covered employer engages a third party to “announce, post, publish, or otherwise make known a job posting,” it must provide the pay scale to the third party and the third party must include it within the job posting, according to the FAQ.

“The Labor Commissioner interprets this to mean that the pay scale must be included within the job posting if the position may ever be filled in California, either in person or remotely,” the FAQ explained.

The term “pay scale” means “the salary or hourly wage range the employer reasonably expects to pay for a position,” although an employer that intends to pay a set hourly amount or a set piece rate amount (and not a pay range) may provide that rate instead.

Employers may include any compensation or tangible benefits provided in addition to a salary or hourly wage—such as bonuses, tips or other benefits—to make recruitment efforts more competitive, but are not required to do so, the FAQ noted.

To make the disclosure, employers must include the salary range within the job posting itself—it cannot be placed elsewhere, via a link or QR code, for example.

To read the FAQ, click here.

To read Senate Bill 1162, click here.

Why it matters: The FAQ guidance should help employers achieve compliance with the amended pay disclosure law, which took effect on January 1, 2023. Employers should review existing postings and ensure new postings contain the required information, or they could face penalties that begin at $100 and can increase to $1,000 per violation.



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