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New Pay Transparency Law Requires Private and Public Employers to Include a Pay Scale in Job Postings and Increased Pay Data Reporting

California public and private employers should begin preparing for significant new requirements for job postings and pay data reporting. On September 27, 2022 Governor Newsom signed Senate Bill 1162 (“SB 1162”), a “wage transparency law” that among other things, requires employers of 15 or more employees to include a pay scale in job postings, and for all employers to provide this information upon request. Large private employers also have new pay data reporting requirements.

The following changes will go into effect on January 1, 2023 under SB1162:

Pay Scale Information — for public and private employers:

  • Employers with more than 15 employees will be required to include a pay scale in salary and hourly job postings, including third-party postings.
  • All employers must provide current employees with a pay scale for their position upon request. Applicants are also entitled to this information upon reasonable request.
  • All employers must maintain a record of each employee’s job title and wage history during their employment period and for three years thereafter. If the employer fails to keep these records, it creates a rebuttable presumption favoring employee claims.
  • There is a new private right of action for injunctive relief or other relief.
  • New civil penalties of $100 to $10,000 are authorized for any violation of the requirements for disclosure, recordkeeping, and other requirements of Labor Code section 432.3.

Annual Pay Data Report – for private employers only:

  • Private employers with 100 or more employees must now submit an annual pay data report with new information on median and mean hourly rates by race, ethnicity, and sex within each job category, regardless of whether a federal EEO-1 form is required.
  • Private employers with 100 or more employees hired through labor contractors must now submit a separate pay data report for those employees.
  • Failure to provide the report can lead to civil penalties as high as $200 per employee.
  • This information must now be submitted on or before the second Wednesday of May, including May 2023.

Takeaways for Employers:

  • Pay Scale
    • Employers should prepare pay scales for each position, as this information may be requested by current employees and applicants.
    • For employers of 15 or more employees, establish policies and revise hiring processes to ensure compliance with new job posting requirements. Still to be clarified is whether employers seeking remote employees (who may or not work in California) must post pay scale information.
    • There may be more litigation because technical violations of the new pay scale requirements could lead to additional claims under the California Private Attorneys General Act (“PAGA”).
  • Pay Data Report
    • Private employers of 100 or more employees (or contracted workers), should establish practices to collect and analyze the information for the pay data reports.
    • Consider whether your pay scale and pay data suggests adjustments are needed to increase pay equity.

Additional updates and information regarding these new requirements will follow. As always, please reach out to your employment counsel at Meyers Nave if you have any questions, concerns, needs for clarification or if you would like further assistance.