Understanding California's Pay Transparency Laws: For Employers

As an employer, you need to stay informed about employment laws. You need to understand what you are legally required to do or legally prohibited from doing and the potential consequences of not adhering to the law. For example, do you understand your new legal requirements and potential consequences for failing to comply with California’s pay transparency laws? At the beginning of 2023, the state’s new pay transparency laws, codified under Labor Code section 432.3, went into effect. According to Labor Code section 432.3, employers with 15 or more workers must include pay scales in job postings. And if a third party publishes a job posting for an employer, the employer must give the third party the pay scale, and the third party must incorporate the pay scale in the job advertisement. Below, we discuss the definition of "pay scale," the 15-employee threshold, whether remote workers are covered, and the potential consequences of violating Labor Code section 432.3.

According to Labor Code section 432.3, "pay scale" is the hourly wage or salary you expect to pay an employee. This does not include tips, bonuses, or commissions. But if a job's salary or hourly wage is based on a commission or piece rate, you must include the piece rate or commission range a worker should expect to receive in the job advertisement.

It is crucial to note that you are prohibited from including a link to the pay scale in a job advertisement. You also cannot include a QR code. The law requires that you include the pay scale in the posting.

As stated, Labor Code section 432.3 applies to you if you have at least 15 employees. So, how do you count your workers for purposes of coverage? Labor Code section 432.3 does not specify how you should do this, but the Labor Commissioner interprets that for pay transparency compliance, an employer reaches the employee threshold when;

• they reach 15 employees at any time in a pay period, and
• at least one worker is based in California.

When this law was approved, many employers got confused about whether the law would apply only when a job could be filled by someone in-person. The Labor Commissioner later provided clarification. According to the Labor Commissioner, Labor Code section 432.3 applies if a job posting is to be filled in California in-person or remotely.

Potential Penalties for Violating Labor Code 432.3

If you violate Labor Code section 432.3, an employee can file a complaint against you with the Labor Commissioner’s Office. However, an employee only has one year to file a complaint. An employer may also bring a civil action for injunctive relief and any other relief the court believes is appropriate.

If you are found guilty of violating Labor Code section 432.3, you may be subject to civil penalties of between $100 and $10,000 per violation.

If you need help ensuring you are complying with Labor Code section 432.3, contact the qualified employment attorneys in San Francisco at SAC Attorneys LLP.