On September 27, 2022, Governor Gavin Newsom enacted a new pay transparency law for the state of California. The law takes effect this month, and it requires all businesses with 15 or more employees to disclose a position’s pay within the job posting regardless of where the vacancy is posted. The pay rate must include either salary or hourly rates and may not include bonuses or stock options.
The wage transparency law was actually an expansion of the “pay scale disclosure upon request” law, which required employers to disclose the pay scale of a position upon request of the interviewee. Under the new law, employees already working within the company and interviewees may request the pay scale, regardless of the number of people under the business’ employ. This means that applicants and employees have a lot more negotiating power when it comes to wages, and businesses may have to rethink their personnel budget to stay competitive within the job market.
For companies with 100 or more employees, there is already a requirement to report pay data on 10 different requested job categories to the California Department of Fair Employment and Housing (DFEH). SB 1162 includes new requirements that expand the collected data to include average pay rates for different demographic groups within the company as well.
Staying Compliant
Non-compliance can be costly, with penalties ranging from $100 to $10,000 per violation, although these fees can be waived for first-time offenses if the issue is corrected quickly. To ensure compliance, it is best to establish consistent pay scales per position and be ready to supply this information upon request or to include it in job postings if required. You also may need to prepare a plan for handling questions from employees regarding any perceived wage discrepancies to avoid allegations of discrimination.
Wage and labor laws will continue to evolve quickly in California as the state comes to grips with the rapidly changing nature of employment. The legal team at Integrated General Counsel can guide you through these changes and ensure you have a solid legal framework on which to build your business. If you would like to learn more about employment law and how we can help you navigate it, contact our firm at (925) 399-1529 (1LAW) for a consultation.
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