Compliance With California’s Pay Data and Transparency Law

In California, Senate Bill 1162, came into effect on January 1, 2023. It requires employers to disclose pay scale information to job applicants and mandates larger businesses to submit annual pay data reports to the California Civil Rights Department. It has two requirements, pay data reporting and pay scale disclosure, as reported in this article that ran in Today’s General Counsel magazine.

The pay scale disclosure component of the law requires employers with 15 or more employees to publish salary or hourly wage ranges they reasonably expect to pay for the position in all job postings. The legislation also requires employers to provide pay scale information to current employees upon request.

Employers with 100 or more employees must submit annual reports that contain the median and mean hourly pay rate, broken down by job category, sex, race, and ethnicity for their employees, including those hired through labor contractors.

Failure to comply with this reporting obligation may result in the Civil Rights Department seeking compliance orders and civil penalties of up to $200 per employee for subsequent violations.

Businesses should ensure that processes are in place to collect and store the data by implementing protocols, utilizing software, or outsourcing work. The authors of the above-referenced article suggest using the reporting obligation as an opportunity to audit their pay data, evaluate their pay practices, and ensure fair and equitable payment for their employees.