Compensation in California Crosses a New Frontier: California’s Pay Transparency
California’s Pay Transparency Law- SB 1162
A Guide For California Businesses
Employer Implications
California’s Pay Transparency Law-SB 1162 is making headway. The state legislature approved the bill on Monday, September 13, 2022. California’s Governor Gavin Newsom has until September 30, 2022, to enact the bill.
This new law would require all employers in California with fifteen or more employees to include the hourly rate or salary range on their job postings. In addition, upon request, employers would be required to provide the pay scale to their staff, and employers would be required to submit data payroll data to the state annually broken down by the demographics of their organization.
Groundbreaking State
The state of California is home to many groundbreaking changes in employment law. California’s Equal Pay Act requires employers in the state to disclose the pay range for positions they’re recruiting for to applicants upon request. In addition, employers within the state with at least one hundred employees are required to submit payroll data to the state annually.
California is now setting a groundbreaking precedent by adding an additional layer of transparency. California would be the first jurisdiction to require employers to distribute payroll data based on the demographics of the organization.
What are the implications of Law-SB 1162?
This new law would require all employers in the state of California with fifteen or more employees to include the hourly rate or salary range within their job postings
Upon request, employers would be required to provide information on what they’re paying their staff members
Employers with one hundred or more staff members would be required to report to the state annually the median and mean hourly rate for each job category broken down by race, ethnicity, and sex
In addition, employers with one hundred or more workers through labor contracts would also be required to submit similar data annually
All employers would be required to record their individual employees’ job title and wage history during employment and for three years post termination
California Fair Pay Act-SB358
The California Fair Pay Act-SB358, originally enacted in 1949, was amended on October 6, 2015, to address pay disparity among men and women within the workplace. The amendment requires employers only to rely on relevant factors to determine pay differences for their staff who perform substantially similar work. Such relevant factors include seniority, merit, quantity or quality of production, or a bona fide factor such as education or experience.
SB358 was also amended to protect employees who wish to discuss their pay with their coworkers openly, and it prohibits employers from retaliating against their staff for doing so.
Employer Liability
SB 1162-Failure to file the required reports or disclose the required information to the state of California would bring penalties to employers for non-compliance. In addition, employees would be eligible to file a complaint with the labor commission, which could lead to further fines and violations.
SB358-The division of labor standards enforcement enforces penalties for employers who violate SB358. Employers would be subject to back pay, interest, and liquidated damages.
To eliminate liability, employers are encouraged to document pay decisions within company policies and job descriptions based on relevant job factors, including job requirements, responsibilities, and working conditions.
Other Transparency Trends
Salary is an important factor for job seekers and, at times, can be a make-or-break decision whether to apply. Organizations are starting to recognize this, and the number of job listings with salary information has been increasing.
Some major companies like Microsoft plan to start disclosing pay on all their job listings more than mandated requirements to recruit qualified candidates.
In addition, to meet job seekers’ needs, popular job listing websites like Indeed recognize this trend and have acted. Indeed encourages employees to post their salary, and if not provided, they utilize an algorithm to atomically pull salary information based upon the job description and the characteristics.
Tools and Resources
Blue Whale has assembled articles and white papers to help companies best manage and guide their compensation program. In addition, at no cost, Blue Whale offers reviews that can help your organization best manage the challenges the pay transparency brings to the employer community.
Let’s Start the Conversation
Blue Whale offers a full range of compensation services to help you achieve your business goals. Whether you’re looking to design a new compensation plan, analyze your current program, or stay up-to-date with the latest trends, we have the expertise and resources to meet your needs. Contact us to learn more about our compensation services and how we can help you take your program to the next level. Let’s start the conversation!