California Amends Pay Transparency and Pay Data Reporting Rules

California has enacted Senate Bill 1162, which amends the requirements for employers regarding pay transparency and pay data reporting. Senate Bill 1162 takes effect January 1, 2023.


Pay Transparency:

Under Senate Bill 1162, effective January 1, 2023:

  • Upon request, all employers must:
    • Provide an employee with the pay scale for their current position; and
    • Provide an applicant with the pay scale for the position for which they applied (previously provided upon request after an initial interview). 
  • All employers must retain records of a job title and wage rate history for each employee. The records must be kept for the duration of employment plus three years after the end of the employment.
  • An employer with 15 or more employees must include the pay scale for a position in any job posting. If the employer engages a third party to announce, post, or publish a job posting, the employer must provide the pay scale to the third party. The third party is required to include the pay scale in the job posting.

Note: Pay scale is defined as a salary or hourly wage range.

Penalties:

Violations of the law may result in penalties ranging from $100 to $10,000 per violation. For first violations of the job posting requirement, no fine will be assessed if the employer demonstrates that all job postings for open positions have been updated to include the pay scale as required. Individuals may also bring civil actions against an employer.

Pay Data Reporting:

 

Existing Law

Senate Bill 1162

A private employer that has 100 or more employees and is required to file an annual Employer Information Report (EEO-1) under federal law must submit a pay data report to the state on or before March 31 each year.

A private employer that has 100 or more employees must submit a pay data report covering the prior calendar year to the state on or before the second Wednesday of May each year, beginning May 10, 2023.

 

A private employer that has 100 or more employees hired through labor contractors within the prior calendar year must submit a separate pay data report to the state covering those employees. The private employer must also disclose on the pay data report the ownership names of all labor contractors used to supply employees. A labor contractor must supply all necessary pay data to the private employer.

The pay data report must include the following information:

  • The number of employees by race, ethnicity and sex in each of the following job categories:
    • Executive or senior level officials and managers
    • First or mid-level officials and managers
    • Professionals
    • Technicians
    • Sales workers
    • Administrative support workers
    • Craft workers
    • Operatives
    • Laborers and helpers
    • Service workers

The pay data report must also include the median and mean hourly rate for each combination of race, ethnicity and sex within each job category.

For employers with multiple establishments, the employer must submit a report for each establishment and a consolidated report that includes all employees.

For employers with multiple establishments, the employer must submit a report covering each establishment. Update: Based on January 2023 guidance from the state, this change means a multiple-establishment employer submits a single report that contains all establishments.

An employer can comply with the requirement if they submit a copy of their EEO-1 Report, containing the same or substantially similar pay data information required.

Employers can no longer comply by submitting a copy of their EEO-1 Report in lieu of a CA pay data report.

Employers may be responsible for the costs associated with the state’s efforts to enforce compliance.

Employers that fail to file the required report may be fined up to $100 per employee, and up to $200 per employee for a subsequent failure to file. Employers may also be responsible for the costs incurred with the state’s efforts to enforce compliance.
 

Next Steps:

California employers should:

  • Review policies and procedures to ensure compliance with the applicable provisions of Senate Bill 1162.
  • Train supervisors on how to respond to employee requests for their pay scales.