California’s New Pay Transparency Requirements

By Sally Trung Nguyen, Partner, Burke, Williams & Sorensen, LLP

Originally printed on January 17, 2023. Reprinted with permission from Burke, Williams & Sorensen, LLP.

On September 27, 2022, California Senate Bill (“SB”) 1162 was signed into law. SB 1162, effective January 1, 2023, imposes new requirements on public and private employers pertaining to pay transparency. The California Labor Commissioner’s office recently released its long-awaited Frequently Asked Questions (“FAQs”) regarding the new requirements. The FAQs are available here.

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Below are some key takeaways:

• Public and private employers with 15 or more employees must include a pay scale in all job postings.
  • If the public or private employer engages a 3rd party to announce, post, publish or otherwise make known of the job posting, the employer must provide the pay scale to the 3rd party and that 3rd party must include the pay scale in the job posting.
  • If the job posting is for a remote position that may ever be filled in California, either remotely or in-person, the pay scale must be included.
  • The pay scale must actually be provided in the job posting itself. It is not sufficient to include a link to the salary range, etc.
  • All public and private employers (regardless of size) must (i) provide an employee the pay scale for the position in which the employee is currently employed upon request; and (ii) provide an applicant with the pay scale for a position applying for employment upon request.
  • “Pay Scale” is defined as the salary or hourly wage range that the public or private employer reasonably expects to pay for the position.
• If a public or private employer intends to pay a set hourly rate or a set piece rate, and not a pay range, then the posting may include that set hourly rate or a set piece rate.
• However, if the employee’s hourly or salary wages is based on a piece rate or commission, then the piece rate or commission range that the employer reasonably expects to pay for the position must be included when disclosing the pay scale.
• Other compensation or tangible benefits that are provided in addition to salary/hourly wage (e.g., bonuses, tips) need not be included when disclosing the pay scale.
• Retention of Pay Data Records (job titles/classification, wage rate histories, other terms and conditions of employment) must be for the duration of an employee’s employment plus 3 years after the employee’s employment termination.
• Civil penalties for failure to comply with these requirements may range from $100 to $10,000 per violation.
• Retaliation against an employee for engaging in action to invoke/assist with the enforcement of these requirements is prohibited.

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