Last Tuesday, September 27, 2022, Governor Gavin Newsom signed California’s pay transparency law (SB 1162) which, among other things, will amend California Labor Code (“Labor Code”) section 432.3 to require employers with 15 or more employees to include pay scale information in job postings. The law will also require employers to provide current employees with the pay range for their job upon request and will impose a records retention requirement for job titles and wage histories.
Current Law
Currently, Labor Code section 432.3 requires employers to provide employment candidates with the pay scale applicable to the position they are applying for only upon reasonable request (i.e., after an initial interview has been completed). Under this section, employers are prohibited from asking about the candidate’s past pay data or relying upon such information as a factor in determining whether to make an offer of employment.
SB 1162: An Expansion of Employer Pay Transparency Requirements
From January 1, 2023, employers must comply with the following pay transparency requirements:
- Pay scale information in job postings: Employers with 15 or more employees must provide pay scale information in any job posting. If an employer uses a third party to upload job postings, the employer must provide the pay scale to the third party, and the third party must include the pay scale in the job posting. “Pay scale” refers to the salary or hourly wage range that the employer “reasonably expects” to pay for the position.
- Pay scale information for current employees: Employers of any size must provide current employees with the pay scale for the employee’s current position upon their request.
- Records retention: During an employee’s employment plus for at least three years after the end of employment, employers must retain records of job titles and wage range history for their employees. These records will be open to inspection by the Labor Commissioner and will allow them to determine if there is a pattern of wage discrepancy.
It is unclear whether SB 1162 will apply to businesses that operate outside of California, but have employees (e.g., remote work employees) in California, or to businesses that post open roles that can be performed remotely from California.
How Should I Prepare for Compliance?
To ensure compliance with California’s new pay transparency law, employers should review all current job descriptions, job postings, promotion prospects, and prospective transfers to determine a reasonably set pay range for an applicant or current employee. Additionally, during the process of negotiations, it is advised to review any applicable collective bargaining agreements or proposals.
Violations of the above requirements are not taken lightly. The Labor Commissioner may issue a civil penalty of between $100 and $10,000 per violation. The actual amount will depend on several factors, including whether the employer has previously violated the law. Additionally, SB 1162 provides for an individual cause of action to be brought within a year after the aggrieved person learns of the violation. Remedies in such a case include injunctive relief and any other relief deemed appropriate by a court. Lastly, failure to comply with the records retention requirement will create a rebuttable presumption in favor of the employee bringing the claim.
MNK Law will continue to monitor developments related to SB 1162 and its effect on employers. For more information about SB 1162, how to best prepare for compliance with SB 1662 and avoid penalties, please contact us at info@mnklawyers.com.
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.
