California demands greater pay transparency for employers in California | Arent Fox Schiff

Governor Newsom signed into law SB 1162 on September 27 (effective January 1, 2023), imposing several new pay transparency reporting requirements on California employers and aligning California with Washington, Colorado and New York City. , which have passed similar laws in recent years. month. Governor Newsom described SB 1162 as a law aimed at addressing the pay gap and promoting equal pay for women in California.

New disclosure requirements

Currently in California, when a candidate “reasonably requests” the salary range for a position, the employer is obligated to provide that information to the candidate. SB 1162 extends this requirement as follows:

  1. Every employer must provide, upon request, the salary scale for the position held by a current employee;
  2. All employers must keep documentation of an employee’s job title and salary history for each employee for the duration of the employee’s employment and for three years thereafter.
  3. Employers with 15 or more employees are required to include “the salary or hourly wage range that the employer reasonably expects to pay for the position” in any job posting, including postings made to them. name by third party companies.

New reporting requirements

SB 1162 also expands disclosure requirements for employers with 100 or more employees. These employers are currently required to publish an annual report”[w]In each job category, for each combination of race, ethnicity and gender”, the median and average hourly rate of employees. SB 1162 expands the number of categories of data employers are required to report and now requires such employers to submit wage data reports to the California Civil Rights Department (formerly known as the Department of Fair Employment and Housing) . Reports should now include:

  1. The number of employees by race, ethnicity and gender in each of the following job categories: (a) managers and senior managers; (b) first and middle level officials and managers; (c) professionals; (d) technicians; (e) vendors; (f) administrative support workers; (g) artisans; (h) officers; (i) laborers and helpers; and (j) service workers. Employers are required to create a “snapshot” that counts all people in each job category by race, ethnicity and gender, employed during a single pay period of the employer’s choice between October 1 and December 31 of the applicable year.
  2. The number of employees by race, ethnicity, and gender whose annual earnings fall within each of the pay bands used by the US Bureau of Labor Statistics in the Occupational Employment Statistics survey.
  3. In each job category, for each combination of race, ethnicity and gender, the median and average hourly rate.
  4. The total number of hours worked by each employee in each pay band during the reporting year.
  5. The North American Industry Classification System (NAICS) code of the employer.
  6. For employers with multiple locations, the employer must now submit a report with the information referenced above for each location. This information must be submitted “in a format that allows [California Civil Rights Department] to search and sort information using readily available software.

Employers with 100 or more employees hired through contractors must also submit a separate compensation data report to the California Department of Civil Rights covering those employees and disclosing the ownership names of any contractors used. to provide these employees.

These reports are due the second week of May each year. For 2023, the deadline is May 10.

Penalties for non-compliance

Employers who fail to file required data reports could be subject to a civil penalty of $100 per employee for a first violation and $200 per employee for subsequent failures. Employees can also file a complaint with the California Division of Labor Standards Enforcement, which could subject the employer to civil penalties of $100 to $10,000 per violation, depending on all of the circumstances (c ie, repeat offender, no effort to comply, etc.). SB 1162 makes it clear that there is no penalty for first violations when an employer shows that “all job postings for all positions have been updated to include the pay scale.”

Remote workers

SB 1162 is silent on reporting requirements for companies that operate outside of California but have remote employees who work in California, or for employers who have employees in California who provide services nationwide. California can look to a similar Colorado law for guidance: any employer with at least one employee in Colorado must include wage disclosure in any job posting for a position that will or may be held in Colorado. , including remote positions.

Next steps for employers

Employers should prepare for January 1, 2023, the effective date of AB 1162, by reviewing job postings, determining the reasonable compensation range set for a vacant position, and compiling data for the report to the California Department of Civil Rights.

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