Understanding California's Pay Transparency Laws: For Employers (Part 2)

Under California’s new pay transparency law, most California employers are required to include pay scales in job postings. This applies even when a third party is posting a job vacancy for an employer. It also applies regardless of whether the job will be filled in person or remotely. Failing to include pay scales on job postings can result in harsh penalties.

Apart from the new pay transparency law requiring employers to disclose pay scales on job postings, California employers are now also required to;

• Provide workers with pay scale details when they request for it,
• Maintain records of job titles and pay histories of employees,
• File a pay data report with the CRD by the second Wednesday of May every year,
• Compute and report by establishment, race, ethnicity, sex, and job category, workers' mean and median hourly rates,
• Submit a separate pay data report covering labor contractors, and
• Submit a report that covers each establishment in a case where an employer has multiple establishments

Before the new law passed, California employers were required to provide pay scale details on reasonable requests to job applicants. Now, under SB 1162, California employers must also provide the pay scale for a worker’s current position if the worker requests it.

California employers must maintain records of job titles and wage rate history for all workers for the duration of their employment. And after a worker's employment ends, the employer must maintain their salary records for three years. Additionally, these records must be available for inspection by the DLSE. The reason for the inspection is to check if there is a pattern of wage discrepancy.

SB 1162 also requires employers with at least one hundred employees to submit pay data reports to the California Civil Rights Department by the second Wednesday of May every year. Some of the information that must be included in a pay data report includes;

• The number of workers by ethnicity, race, and sex by ten job categories,
• The number of hours worked by each worker in each pay band, and
• The mean and hourly rate of workers by establishment, sex, race, ethnicity, and job category.

The last one is a new data element that did not exist before January 1, 2023.

In a situation where an employer has at least one hundred workers hired through "labor contractors," the employer must file a separate report covering these workers. This will be on top of an employer submitting the pay data report for their workforce.

Additionally, if an employer has multiple establishments, they must submit a report that covers each establishment. Previously, employers could submit a consolidated report.

If you fail to submit the required pay data report, the CRD can request a civil penalty of up to $100 or $200 per worker, depending on whether it is a first or subsequent violation. On the other hand, if you violate the law on disclosing pay scale details to an employee, a civil penalty of between $100 and $10,000 per violation may be imposed.

Employment laws can be complicated. Contact the skilled employment attorneys in San Francisco at SAC Attorneys LLP for help understanding the state’s pay transparency laws. We can also help ensure you are abiding by the law.