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How Does California’s New Pay Transparency Law Impact Your Organization?
While those of you in the public sector are accustomed to seeing salary information in job postings, now private employers who post jobs in California are required to post salary ranges in their job advertisements. Effective January 1, 2023, California expanded its pay transparency laws. The new law has two major components: 1) pay scale disclosure; and 2) pay data record keeping and reporting. Read on to find out how these laws impact your organization.
Pay Scale Disclosure
Under the new law, all private employers with 15 or more employees who post jobs in California will need to include pay scale data in published job advertisements. Moreover, if an employer uses a third party to advertise a job, the employer must provide the third party with a pay scale to include in the job posting. The law describes the pay scale is “the salary or hourly wage range that the employer reasonably expects to pay for the position.” However, there is no further guidance in the statute about how broad the pay scale range can be.
While the salary disclosure requirements may be old hat for public entities, there are components of the new law that apply to both the private sector and the public sector. For example, upon request, all employers of any size are required to disclose the pay scale for a position to both job applicants and current employees.
Similarly, the portions of the law regarding salary determinations apply to both public and private sector employers. Under Labor Code section 432.3, employers cannot rely on an applicant’s salary history as a factor in determining whether to offer employment or in determining what salary to offer an applicant. In fact, employers are prohibited from seeking an applicant’s salary information. However, nothing in the law prohibits an applicant from voluntarily disclosing salary history information to a prospective employer. If an applicant voluntarily discloses salary history information without prompting, then the employer can consider such information in setting the salary for the applicant. So, what can you ask an applicant when it comes to pay? You can ask about the applicant’s salary expectation for the position for which they have applied.
Pay Data Reporting
California’s new pay transparency law also impacts employer data reporting for both public and private sector employers. The law also requires employers to maintain records of job title and wage history for each employee for the duration of employment plus three years. The Labor Commissioner can inspect those records to determine if there is a pattern of wage discrepancy. If employers violate these rules the Labor Commissioner may issue penalties up to $10,000. Moreover, if an employer fails to keep records in violation of Labor Code section 432.3, there is a rebuttable presumption of pay disparity in favor of the employee if the employee makes a legal challenge. This is especially important to note because the new law created a private right of action for violations of the pay transparency law, giving aggrieved parties the right to seek injunctive and “any other appropriate relief.”
What can you do to be ready for the new law?
- Make sure your job advertisements include salary information.
- Be sure your hiring personnel are aware of what they can and cannot ask applicants regarding their salary history. LCW offers training on hiring and a variety of other topics. Contact Anna M. Sanzone-Ortiz (firstname.lastname@example.org) for more information on LCW’s training programs!
- Maintain job title and wage history information for three years after employee separation.
- Consider a pay equity audit of current employee wages to ensure there are not any significant discrepancies or inequities.
- Consider developing a formalized pay equity policy.
The law is seen as a positive step towards achieving pay equity in California, and is a model for other states to follow. However, it remains to be seen how effective the law will be in achieving its goals, and how it will be enforced.
If you have any questions or need further guidance on how to comply with California’s wage transparency law, contact your trusted legal counsel.