On September 27, 2022, Governor Gavin Newsom signed new legislation, Senate Bill 1162, into law to support wage transparency and advance California’s commitment to Pay Equity. The package includes several components that employers need to be aware of and prepared for.
Increased Wage Transparency with Employees and Applicants:
Effective January 1, 2023, California joins many states including Colorado, Washington, New York City, Cincinnati, Toledo, and local municipalities in requiring employers to post pay scales in job postings to support wage transparency.
Employers with 15 or more employees must include the pay scale for a position in any job posting. “Existing law defines pay scale for these purposes to mean salary or hourly wage range”. All employers must disclose the pay scale to an applicant of that position upon reasonable request.
If employers use a third party to “announce, post, publish, or otherwise make known a job posting”, they must provide the pay scale to the third party to include in the job posting.
All employers must provide the pay scale to an employee for the position they currently hold, upon their request.
Employers must keep records of job titles and pay history for all employees during their employment plus three years after the end of their employment.
“The bill would require the Labor Commissioner to investigate complaints alleging violations of these requirements and would authorize the commissioner to order an employer to pay a civil penalty upon finding an employer has violated these provisions. The bill would also authorize a person aggrieved by a violation of these provisions to bring a civil action for injunctive and any other appropriate relief.”.
Changes to Pay Data Reporting Requirements:
The legislation changes California’s current law that requires large employers to submit pay data, by changing the data required and submission date.
Currently, large employers with 100 or more employees are required to submit a pay data report, EEO-1 to the Equal Employment Opportunity Commission (EEOC) on or before March 31 each year, and submit “the same or substantially similar pay data information” to the California Civil Rights Department (CRD). “This bill would, instead, require a private employer that has 100 or more employees to submit a pay data report to the department”. The submission date will also be changing, requiring employers to submit this information on the Second Wednesday of May 2023, and the second Wednesday in May each year thereafter. "This bill would also require a private employer that has 100 or more employees hired through labor contractors, as defined, to also submit a separate pay data report to the department for those employees in accordance with the above timeframe, as specified.” The bill would require new and additional pay data to be reported, see details, to the CRD. Additionally, “This bill would delete a provision requiring employers with multiple establishments to submit a consolidated report”, allowing the data to be reported separately. “This bill would delete the provision authorizing an employer to submit an EEO-1 in lieu of a pay data report.”. There will be a required format to provide the pay data to the CRD so that it can be searched and sorted by software.
There are significant consequences and financial penalties for non-compliance.
Review existing or create salary ranges for existing positions.
Conduct a pay equity audit of your workforce and make related pay adjustments for any discrepancies as needed.
Make sure all your job postings, including those posted by a third party, include pay scales by or before January 1, 2023, if you are an employer with 15 or more employers.
Make sure your pay data is housed appropriately and ready to be reported by May 2023, if you are a large employer with 100 or more employers.
If you have multistate operations including work from home employees, check to see if your organization is covered by similar pay transparency laws currently in effect, or that will soon take effect, in other jurisdictions.
Consider adopting a national policy addressing salary ranges if they have multistate operations.
Ensure any records maintenance policies are updated to comply with the law’s record-keeping requirements.
View the complete text here for further details on Senate Bill No. 1162
If you need help getting your company prepared and compliant, or have questions about how this might impact your business, contact your HR consultant or reach out to The HR Manager today.