California Enacts Pay Transparency Requirements

In a much anticipated move, California Governor Gavin Newsom signed the state’s new pay transparency bill into law (available here) on September 27, 2022. (See prior blog post here). The law will take effect on January 1, 2023. Under the new law, employers must disclose pay ranges in job postings, among other requirements.

Businesses conducting operations in California will need to be mindful of these new rules. Some of the requirements include the following:

• Employers with 15 or more employees must include the pay scale for a position in any job posting. Pay scale means “the salary or hourly wage range that the employer reasonably expects to pay for the position.” Currently, it is unclear if the 15 employees must work in California or if the law refers to 15 or more employees overall. It also is unclear if the law covers remote workers in California applying for jobs with companies located outside of the state.  
• Upon request, an employer, regardless of size must provide an employee the pay scale for the position in which the employee is currently employed.
• Employers also must maintain records of the employee’s job title and wage rate history for the duration of the employment plus three years after the end of the employment.

This pay transparency law is just one of many laws California has enacted in recent years to promote pay equity. For example, California also will now require private employers with 100 or more employees to submit reports to the state that detail, “each combination of race, ethnicity, and sex, the median and mean hourly rate” for each of the employer’s job categories. Currently, these reports are scheduled to be submitted starting in May 2023, and every May thereafter.

Additionally, private employers with 100 or more employees hired through labor contractors must submit a separate pay data report to the state covering contingent employees. Labor contractors must also supply the necessary pay data to their clients (i.e., the private employer).   

If you have questions about this or any other workforce issue, please contact your relationship attorney or one of Honigman’s Labor and Employment attorneys.