California’s Governor, Gavin Newsom, signed Senate Bill 1162 requiring employers to make pay scales available to job applicants and employees as well as expanding California’s pay data reporting requirements.
The expansion of the new pay scale and pay data reporting requirements to become effective on January 1, 2023.
Pay Scale Disclosures
Currently, employers are prohibited from asking applicants regarding salary history and must provide applicants with pay scale information upon request. As of January 1, 2023, the obligation expands beyond job applicants. Upon request, employers must provide the pay scale for the position that the employee is currently working.
Additionally, employers with 15 or more employees must include pay scale information for a position in any job posting.
The new regulation also requires employers to maintain records of job titles and wage rate histories for each employee for the duration of their employment plus three (3) years after the end of employment. In the event of a claim, the California Labor Commissioner must be able to inspect the records and determine if there are any wage discrepancies. If an employer fails to keep records as required, the law creates a rebuttable presumption in favor of an employee’s claim. Civil penalties range from $100 to $10,000. However, the Labor Commissioner will not assess a penalty for the first violation of the law if the employer demonstrates that all job postings for open positions have been updated to include the pay scale as required.
Pay Data Reporting
SB 1162 expands California’s pay data reporting requirements, including adding a new data requirement and requiring separate pay data reports for employers with 100 or more employees hired through labor contractors.
Current law requires employers with 100 or more employees to submit pay data reports to the California Civil Rights Division. Employers must now report one more category in their pay data report —employers must provide, “within each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate.”
The law requires private employers with “100 or more employees hired through labor contractors within the prior calendar year” to submit a separate pay data report covering the employees hired through labor contractors. The report must include the ownership names of all labor contractors used to supply employees.
The new law also specifies that for employers with multiple establishments, the employer must submit a report covering each establishment.
Lastly, the law changed the deadline for the reports to the second Wednesday of May annually. The first report under the new requirements will be due May 10, 2023.
Don’t hesitate to contact your Risk Advisor for guidance on these changes and the impact on your current processes and practices.