California Enacts New Pay Transparency Law

September 27, 2022
On September 27, 2022, Governor Newsom signed into law Senate Bill No. 1162, which imposes new pay data disclosure and reporting requirements on California employers.
Job Postings Must Include Pay Scale. The law requires that an employer with 15 or more employees include the pay scale for a position in any job posting, whether the posting is internal or external. If such an employer engages a third party to announce, post, publish, or otherwise make known a job posting, the employer must provide the pay scale to the third party, and the third party must include the pay scale in the job posting. “Pay scale” has been previously defined in California Labor Code section 432.3 to mean a salary or hourly wage range, and does not include bonuses, equity, or other types of compensation.
Expansion of Pay Scale Disclosures Upon Request. The law requires that an employer, upon request, provide an employee the pay scale for the position in which the employee is currently employed.
Enforcement of Pay Scale Disclosure Requirements.
  • The law requires the Labor Commissioner to promptly investigate complaints alleging violations of the pay scale disclosure requirements and authorizes the Labor Commissioner to order an employer to pay a civil penalty of no less than one hundred dollars ($100) and no more than ten thousand dollars ($10,000) per violation. No penalty will apply for a first violation if the employer demonstrates that all job postings for open positions have been updated to include the pay scale.
  • The law also authorizes persons aggrieved by a violation of the pay scale disclosure requirements to file a written complaint with the Labor Commissioner and bring a civil action for injunctive relief and any other relief that a court deems appropriate.
  • An employer must also maintain records of a job title and wage rate history for each employee for the duration of the employment plus three years after the end of the employment. These records must be open to inspection by the Labor Commissioner.
  • If an employer fails to keep such records, there is a rebuttable presumption in favor of the employee’s claim.
Expansion of Pay Data Reporting Requirements.
  • The law amends existing reporting requirements to require any private employer that has 100 or more employees (with at least one employee in California) to submit a pay data report to the Civil Rights Department (formerly, the Department of Fair Employment and Housing) covering the prior calendar year. Previously, this report only needed to be submitted by employers who were also required to file an annual Employer Information Report (EEO-1) pursuant to federal law.
  • The law also requires that a private employer that has 100 or more employees hired through labor contractors (i.e., an individual or entity that supplies an employer with workers to perform labor within the employer’s usual course of business) within the prior calendar year submit a separate pay data report to the department covering the employees hired through labor contractors in the prior calendar year, as well as the ownership names of all labor contractors used to supply employees.
  • In addition to what was already required under existing law, the law also now requires that pay data reports include the median and mean hourly rate, within each job category, for each combination of race, ethnicity, and sex.
  • Employers with multiple establishments are no longer required to submit a consolidated report and need to submit only a report covering each establishment.
  • In addition to existing enforcement mechanisms, the law also now permits, upon request by the department, a court to impose a civil penalty not to exceed one hundred dollars ($100) per employee upon any employer who fails to file the required report and not to exceed two hundred dollars ($200) per employee upon any employer for a subsequent failure to file the required report.
  • Under the law, the deadline to submit a pay data report is now the second Wednesday of May each year.
Effective Date. The new pay scale disclosure requirements go into effect on January 1, 2023. The updated pay data reports are due starting May 10, 2023.