On behalf of Fairchild Employment Law | October 18, 2022 | California Leave Laws
On September 27, 2022, California Governor Gavin Newsom signed Senate Bill 1162, a pay transparency bill requiring employers to include pay ranges in job advertisements. SB 1162 also expands annual pay data reports to the California Civil Rights Department (CRD) beginning on May 10, 2023, and every second Wednesday in May annual thereafter.
Pay Ranges in Job Advertisements
Current law prohibits employers from asking applicants about their salary history during the hiring process. California also requires employers to provide a pay scale for a position to an applicant upon request. Starting on January 1, 2023, these requirements will be expanded by:
- Requiring employers with 15 or more employees to include the pay scale, defined as the “salary or hourly wage range that the employer reasonably expects to pay for the position,” in any job posting. If the employer uses a third party to publish or post a job, they must provide the pay scale to that third party who must include it in the posting.
- Requiring all employers to provide the pay scale for the position in which a current employee is employed, upon request.
- Requiring all employers to maintain records of job title and wage history for each employee for the duration of employment and three years after the end of employment so that the state’s labor commissioner – who is authorized to inspect these records – can “determine if there is still a pattern of wage discrepancy.”
Employees aggrieved by an employer’s noncompliance with the pay disclosure requirements may file a complaint with the California Division of Labor Standards Enforcement (DLSE) within one year of the date they learned of the violation or file a civil action for injunctive relief. If the DLSE finds that an employer violated the law, employers may be subject to civil penalties of $100 to $10,000 per violation. The labor commissioner will determine the amount of the penalty based on the totality of the circumstances, including prior violations. Importantly, no penalty shall be assessed for a first violation where an employer shows that “all job postings for all positions have been updated to include the pay scale.”
Pay Data Reporting Requirements
California law will now require private employers with 100 or more employees to submit pay data reports to the CRD (regardless of that employer’s requirements to submit EEO-1 reports to the EEOC) and expands the number of data categories those employers are obligated to report. The pay data reports will be due annually on the second Wednesday in May, beginning on May 10, 2023, and must include data covering the prior calendar year (the “reporting year”). The reports must include:
- The number of employees by race, ethnicity and sex in 10 job categories, based on a “snapshot” that counts all individuals employed in these categories during a single pay period of the employer’s choice between October 1 and December 31 of the reporting year. The job categories include:
- Executive or senior-level officials and managers
- First- or mid-level officials and managers
- Sales workers
- Administrative support workers
- Craft workers
- Laborers and helpers
- Service workers
- The number of employees by race, ethnicity and sex, whose annual earnings fall within each of the pay bands used by the US Bureau of Labor Statistics in the Occupational Employment Statistics survey.
- Within each job category, for each combination of race, ethnicity and sex, the median and mean hourly rate.
- The total number of hours worked by each employee in each pay band during the reporting year.
- The employer’s North American Industry Classification System (NAICS) code.
- The employer’s clarifying remarks regarding the information provided (optional)
Employers with 100 or more employees hired through labor contractors must now produce data on pay, hours worked, race/ethnicity, and gender information in a separate report.
If an employer fails to file the pay data reports, the CRD can seek a court order requiring compliance and recover costs associated with seeking such order. A court also can impose civil penalties of $100 per employee, and up to $200 per employee, for subsequent failures to file the report. If an employer cannot comply because a labor contractor has not provided the required pay data information, a court may also apportion an “appropriate amount of penalties” to such contractor.