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On September 27, 2022, Governor Newsom signed into law Senate Bill 1162, requiring California employers to provide, upon request by applicants and current employees, the pay scale for the position applied for or currently held. The law also requires employers with 15 or more employees to include the pay scale for a position in any job posting. A pay scale is defined as “the salary or hourly wage range that the employer reasonably expects to pay for the position.” Employers are also required to maintain records of job titles and wage rate history for each employee for the duration of the employment plus three years after its end.

The new law expands the pay data reporting requirements for certain employers. Current law requires private employers with 100 or more employees to submit pay data reports to the California Civil Rights Department (CRD, formerly known as the California Department of Fair Employment and Housing) each year. While current law requires covered employers to submit reports in March of each year, SB 1162 will require covered employers to submit these reports on or before the second Wednesday of May 2023 and on or before the second Wednesday of May of each following year.

While current law requires covered employers to report certain information, such as the number of employees by race, ethnicity, and sex for 10 specific job categories, the new law requires employers to include the median and mean hourly rate within each job category, for each combination of race, ethnicity, and sex.

Some additional changes to the pay data reporting include:

• Submitting separate pay data reports for private employers with 100 or more employees hired through labor contractors, defined as an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.

• Submitting separate reports covering each establishment for employers with multiple establishments. An establishment is defined as “an economic unit producing goods or services.”

• Submitting information that is “made available in a format that allows the [CRD] to search and sort the information using readily available software.”

Penalties for non-compliance are significant. Failure to provide the pay data report can result in the CRD seeking an order for compliance and “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.” Failure to comply with the pay transparency requirements of providing the pay scale upon request and including it in job postings can result in an aggrieved person filing a written complaint with the labor commissioner within one year after the date the person learned of the violation.

Additional consequences include a civil action for injunctive relief and “any other relief that the court deems appropriate” and an order for the employer to pay a civil penalty of no less than $100 and no more than $10,000 per violation.

California employers will need to prepare now in order to comply with the January 1, 2023, effective date. The California Legal Services team can assist with questions related to this new law. Contact us at CAinfo@employerscouncil.org.