Proposed California Bill Introduces New Pay Transparency Requirements

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The California Senate has recently introduced a new bill that would, if passed, introduce one of the most stringent pay transparency laws in the U.S. This draft of the law will introduce strict wage range disclosure and pay data reporting requirements.

Wage Range Disclosures

Under California’s existing wage range disclosure requirements, employers must provide external candidates with a pay scale for the job to which they are applying upon reasonable request. This requirement was the first of its type in the country, but as more and more states have introduced similar but stronger requirements, the state rule has begun to appear lenient in comparison.

Under SB 1162, employers must provide pay scales proactively with each job posting. Currently, it is unknown whether this will apply to employers from out of state who engage employees in California. The bill would also require employers to let all current employees know of an opportunity for promotion as well as the pay scale for this position on the same calendar day prior to making a promotion decision.

Pay Data Reporting Requirements

SB 1162 would also enhance California’s existing pay data reporting requirements. The state’s current rules require employers of 100 or more employees to provide the state with the number of employees it has by race, ethnicity, and sex in each of the job categories specified in the federal Employer Information Report and within each pay band. Employers were already familiar with these requirements under federal law and now have already filed their first state-level report last year.

However, under SB 1162, employers would face several new obligations, including:

  • Expanded pay data reporting requirements, including all employees that are hired through third parties that provide workers who perform labor that falls within the reporting employer’s usual course of business. The reporting employer must also include the ownership names of any such labor contractors used to supply employees.

The state will make the data it receives from each employer available on a public-facing website without any information that could be identifiable to a particular individual.

Employers would be required to provide the mean and median hourly rate for employees of every combination of race, ethnicity, and sex within each of the reported job categories.

Establish a monetary penalty for failure to file a report. For the first offense, this fine would be no more than $100 per employee and for subsequent failures no more than $200 per employee.

Though this bill was just introduced, and it is highly uncertain that it will make it into law, it would introduce major changes for employers. As a result, it is certainly a bill that employers will want to keep an eye on.

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