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Key Takeaways from the Newly Released Guidance Regarding Pay Transparency in California

As we previously reported, California employers have new wage transparency requirements that began January 1, 2023. The signing of SB 1162 into law left many employers looking for additional guidance. Late last month, the California Labor Commissioner issued some guidance on the law through a series of FAQs.

The Labor Commissioner provided guidance on the these previously unanswered questions:

1. Must the pay scale include bonuses, tips, or other benefits?

No. “Pay scale” means the salary or hourly wage range the employer reasonably expects to pay for a position. The Labor Commissioner’s position is that any compensation or tangible benefits provided in addition to a salary or hourly wage are not required to be posted. The employer may include this information to make its recruitment efforts more competitive and employers are cautioned other forms of compensation may be considered for equal pay purposes.

2. Must the pay scale include expected commissions?

Yes. If the hourly or salary wage is based on commissions or piece rate, the commission range or piece rate range must be included in the job posting.

3. Does the job posting requirement apply to companies that have less than 15 employees in California, but 15 or more nationwide?

Yes. The Labor Commissioner interprets the statute to apply to any employer with at least 15 employees, one of whom is in California. In addition, any individual performing any kind of compensable work for the employer who is not a bona fide independent contractor would be considered and counted as an employee, including salaried executives, part-time workers, minors, and new hires.

4. Do job postings have to include the pay scale for remote jobs that could be performed outside of California?

Yes. The Labor Commissioner interprets the statute to mean that the pay scale must be included within the job posting if the position may ever be filled in California, either in-person or remotely.

5. Can employers link to the salary range in an electronic posting or include a QR code in a paper posting that will take an applicant to the salary information?

No. The Labor Commissioner’s position is that employers must include the pay scale within the posting.

One outstanding issue:  The new guidance does not clarify whether the pay scale requirements only apply to postings made on or after January 1, 2023, or if it will apply to all postings that remain active as of January 1, 2023. To be safe, we recommend ensuring all active job postings satisfy the new pay scale requirements.

The new pay transparency law and other employment laws that employers need to know will be discussed on January 11 and January 12, 2023 at Meyers Nave’s annual California Employment Law Update.

Please reach out to the authors to see what we can do to help you finalize any pay scale requirements or provide additional guidance related to pay transparency in the new year.