On September 27, 2022, Governor Gavin Newsom signed SB 1162, which takes effect on January 1, 2023. The new law requires employers to make salary and hourly wage ranges for positions available to applicants and employees, and expands pay data reporting requirements.
California joins a growing list of other states and municipalities such as Colorado, Washington, and New York City, that have adopted similar measures in an effort to identify purported pay disparities. Here is what California employers need to know:
Pay scale Information Must Be Made Available to certain Employees and Applicants
Starting on January 1, 2023, all California employers will be required, upon request, to provide employees and applicants for employment with the "pay scale" for the position in which the individual is either currently employed or to which they are applying. "Pay scale" is defined as the salary or hourly wage range that the employer reasonably expects to pay for the position.
Employers with 15 or more employees will be also required to include the pay scale for a position in any job posting. The law further requires employers to maintain records of a job title and wage rate history for each employee for the duration of the employment and for three years after the end of the employment relationship. Employers who do not comply with this law can be liable for civil penalties up to $10,000 per violation.
Private Employers With 100+ Employees Will Be Required To Submit A Pay Data Report
Existing law requires private employers with 100 or more employees and who are required to file an annual Employer Information Report (EEO-1) pursuant to federal law, to submit a "pay data report." SB 1162 makes EEO-1 requirements irrelevant as to pay data reporting obligations and requires all private employers with 100 or more employees or 100 or more employees hired through labor contractors to submit a pay data report to California's Civil Rights Department by the second Wednesday of May each year.
Existing law requires the pay data report to include the number of employees by race, ethnicity, and sex for the below-listed job categories. The new law will additionally require the median and mean hourly rate for each combination of race, ethnicity, and sex within each of the following job categories:
- 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
Employers who do not comply with the new pay data report obligations could face liability for civil penalties up to $100 per employee for an initial failure to file, and up to $200 per employee for any subsequent failure to file the required pay data report.
Employers should begin now to assess and update their data record-keeping and disclosure practices to ensure timely compliance with the new requirements under SB 1162. The information required by the new law must be made available in a format that allows the State of California to search and sort the information using readily available software.
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