California is stepping up its efforts to make workplaces more transparent and fairer. Beginning January 1, 2026, California employers will face new pay transparency requirements under Senate Bill 642, which requires employers to provide a good-faith pay scale for any position when requested by a job applicant or current employee. The pay scale needs to be a realistic range of expected salary or hourly wage. Employers with 15 or more employees must also include this pay range in all job postings. The goal is to make pay practices more open and consistent, as allowing job seekers and employees to make better-informed decisions about compensation leads to a more equitable workplace and strengthens the job market.
The law also clarifies the statute of limitations and the maximum period for which employees can claim back pay. Under SB 642, employees have three years from the date of the alleged pay discrimination to file a claim or lawsuit. Once a timely claim is filed, an employee can recover up to six years of lost wages if a pay disparity based on sex, race, or ethnicity is proven. Even though this pay-equity framework increases potential exposure for employers, it ultimately benefits them because transparent and equitable pay practices would help attract top talent, retain valued employees, and build a reputation for fairness.
To comply with the new legislation and align with the maximum back-pay recovery period, employers should maintain accurate and detailed pay records for at least six years. This includes pay data, job descriptions, and documentation of compensation decisions, all of which are essential for defending against potential claims. Beyond compliance, the law reflects California’s ongoing effort to close wage gaps and promote transparency in workplace compensation. Lawmakers view clear disclosure and thorough documentation as key tools for ensuring fair pay and accountability.
Overall, employers should review all job postings to include clear pay ranges, establish a reliable process for responding to pay-scale requests, and conduct internal pay audits to identify inconsistencies. Employers should also train HR and management staff to handle inquiries appropriately and maintain thorough documentation of how pay decisions are made. These measures will help limit legal risk, build employee trust, and align compensation practices with California’s growing transparency standards.
For questions about California’s new pay transparency requirements under SB 642, employers and employees should consult qualified legal counsel or contact us at info@mnklawyers.com
Disclaimer: This summary provides general information on SB 642 and related California pay-equity and transparency laws. It is not legal advice, and readers should seek professional guidance regarding specific circumstances or questions.