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California Proposes Bill To Expand Employer Pay Transparency and Pay Data Reporting
Apr 21, 2022

California Proposes Bill To Expand Employer Pay Transparency and Pay Data Reporting

Topics: Wage & Hour Issues

On February 17, 2022, Senate Bill 1162 was introduced to further burden employers as to “pay transparency” and “pay data reporting”.  SB 1162 proposes two major changes:  

  1. Requiring employers to submit pay data reports to the Department of Fair Employment and Housing (“DFEH”), including the median and mean hourly rate for employees categorized by race, ethnicity, and sex within specified job categories; and 
  2. Requiring California employers to proactively provide pay ranges in job postings.

SB 1162 Proposed Amendment of Section 12999 of the Government Code

Existing law requires California employers of 100 or more employees, with at least one employee in California, to submit annual pay data reports to the DFEH.  The statutory goal is to have employers self-evaluate pay disparities along gender, racial, and ethnic lines to encourage voluntary compliance with equal pay and anti-discrimination laws.  
 
Currently, employers must annually report to the DFEH: 

  1. The number of employees by race, ethnicity, and sex, during the snapshot period of October 1 to December 31 of the reporting year. 
  2. The number of employees by race, ethnicity, and sex, whose annual earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics. 
  3. The total number of hours worked by each employee plus paid time off (such as paid sick time, and holiday time). 
  4. A certification that the information contained in the pay data report is accurate and prepared in accordance with Government Code section 12999 and DFEH's instructions, and the name, title, signature, and date of signature of the certifying company representative. 
  5. The name, title, address, phone number, and email address of someone who can be contacted about the report.

If SB 1162 is enacted, employers' reporting obligations will expand.  Employers will be required to submit pay data reports that include the median and mean hourly rate within specific job categories, by race, ethnicity, and sex.  Pay data reports will be required for workers in the following job categories: (1) executive or senior-level officials and managers; (2) first or mid-level officials and managers; (3) professionals; (4) technicians; (5) sales workers; (6) administrative support workers; (7) craft workers; (8) operatives; (9) laborers and helpers; and (10) service workers.  

SB 1162 will also expand the pay data reporting obligation to employers who utilize labor contractors.  Employers with 100 or more employees hired through labor contractors will be required to submit a separate pay data report to the DFEH.  And, the new law will require employers to disclose the ownership of all labor contractors used to supply the employees.  “Labor contractor” is defined as an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.  This includes temporary workers and workers providing services through staffing agents. 

In addition, SB 1162 will require that the DFEH publish each private employers’ pay data report on a public website so that the information is accessible and, theoretically, in a manner that does not identify employees by name. 

SB 1162 also adds penalty provisions for the failure to file the required pay data report.  Existing law under Government Code section 12999 does not impose civil penalties.  However, if SB 1162 is enacted, this Bill “would permit a court to impose a civil penalty not to exceed one hundred dollars ($100) per employee upon any employer who fails to file the required report and not to exceed two hundred dollars ($200) per employee upon any employer for a subsequent failure to file the required report.” Any penalty imposed would be paid to the Fair Employment and Housing Enforcement and Litigation Fund. 

Finally, the proposed measure will change the filing deadline to the DFEH from March 31 of each calendar year to May 11, 2023 and the second Wednesday of May every year thereafter. 
 
SB 1162 Proposed Amendment of Section 432.3 of the Labor Code

SB 1162 also proposes to expand the pay transparency laws under Section 432.3 of the Labor Code.  Existing law requires all California employers to provide job applicants with a pay scale upon reasonable request.  The proposed measure will require all California employers to proactively provide pay scales for open positions in job postings, not just upon request.  In addition, SB 1162 will require all California employers to announce, post, publish, or otherwise make known any opportunity for promotion and the pay scale for the position to all current employees on the same calendar day the role is posted publicly, and prior to making a promotion decision. 
  
SB 1162 provides a private right of action for injunctive and any other relief a court deems appropriate.  Furthermore, an aggrieved employee may file a written complaint with the Labor Commissioner.  SB 1162 permits the Labor Commissioner to order an employer found in violation to pay a civil penalty between $500 and $10,000 per violation.  These funds would be deposited into the Labor Enforcement and Compliance Fund.  If an employer fails to keep records regarding employee pay scales, there is a rebuttable presumption in favor of the employee’s claim.

Senate Judiciary Committee Hearing 

SB 1162 is scheduled for a hearing before the Senate Judiciary Committee on April 26, 2022.  CDF will continue to monitor this proposed Bill and provide relevant updates.  If you have any questions about how to comply with California's existing DFEH's pay data reporting requirements, please do not hesitate to contact CDF counsel. 

About CDF

For over 25 years, CDF has distinguished itself as one of the top employment, labor and immigration firms in California, representing employers in single-plaintiff and class action lawsuits and advising employers on related legal compliance and risk avoidance. We cover the state, with five locations from Sacramento to San Diego.

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Sacramento Office Managing Partner and Chair of CDF’s Traditional Labor Law Practice Group. Mark has been practicing labor and employment law in California for thirty years. His practice has a special emphasis on the representation of California employers in union-management relations and handling federal and state court litigation and administrative matters triggered by all types of employment-related disputes. He is also adept at providing creative and practical legal advice to help minimize the risks inherent in employing workers in California. He recently named “Sacramento Lawyer of the Year” in Employment Law-Management for 2021 by Best Lawyers®.
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