Understanding Changes to California’s Pay Transparency Laws

In September 2022, Governor Newsom signed legislation that will require employers to disclose pay scales to current employees and in all job postings starting in 2023. In addition, employers must now disclose more salary data to the California Civil Rights Department. The required information includes median and mean hourly rates.

The increased pay data reporting begins with the May 10, 2023 Pay Data Report. New data to report include the following:

• For each job category, employers must report median and mean hourly rates for each combination of race, ethnicity, and sex.
• Annual reports are now due on the second Wednesday of May. 
• Employers with more than one location or establishment are no longer required to submit consolidated reports but must report for each establishment.
• Employers with 100 or more employers hired through labor contractors must report data on pay, hours worked, race/ethnicity, and gender data in a separate report. The law requires labor contractors to supply all necessary pay data to provide employers but does not require them to collect or define it. However, the law allows courts to apportion any penalty to the labor contractor who didn’t supply the required pay data.
• This latter comment relates to the civil penalty of up to $100 per employee for an employer’s initial failure to file required reports and the $200 per employee penalty for any subsequent failure to file. 

As of January 1, 2023, California employers with 15 or more employees must provide job applicants the pay scale for the position the candidate is applying for in all job positions and provide it to any third parties who will post those jobs. No penalty will apply to the first violation of this rule, but only if the employer can show that all job positions for open positions were updated to include the pay scale. All employers of any size must provide a pay scale for a current employee’s position if an employee requests it. The “pay scale” is the salary or hourly range the employers reasonably expect to pay for the position.

The new law also imposes a new recordkeeping requirement, effective January 1,  on employers. All employers must now maintain records of job titles and wage rate histories for the duration of each employer’s employment and for three years after the termination of that employment. These records are open to inspection by the state Labor Commission. 

Failure to comply with the pay scale disclosure or recordkeeping requirements can result in civil penalties from $100 to $10,000 per violation.

Speak with a California Employment Law Attorney

Effective dates have been highlighted in this blog post to help employers see what they must do and when, though some companies will not comply, violating the rights of employees. If you believe your employer is not in compliance with the law or is providing unfair compensation, reach out to experienced employment law attorneys to assist you. Contact Olivier & Schrieber, PC for help today.