New FAQs Published for California’s Pay Transparency Law
Just prior to the New Year, the California Labor Commissioner’s Office released updated Frequently Asked Questions (“FAQs”), which clarified the California Equal Pay Act’s pay scale disclosure requirements that were effective January 1, 2023. While the Equal Pay Act has been amended almost annually since its most significant revisions in 2016, these particular FAQs supplied further information on Senate Bill No. 1162 (“SB 1162”). SB 1162 requires certain California employers to disclose pay scale information and provide more robust pay data reporting. Our prior blog post on SB 1162 is here.
California’s Pay Transparency Law, codified under Labor Code 432.3, now requires employers to provide employees with pay scale information for their position, and further requires employers with 15 or more employees (only one of whom need be in California, and includes remote, hybrid, as well as in-person positions) to affirmatively include pay scale information in job postings. Links to pay scales on a separate document or provision of a QR code are insufficient. “Pay scale” is defined as the “salary or hourly wage range that the employer reasonably expects to pay for the position.” Bonuses, tips, and other benefits are not included in this definition. If the employer intends to pay a set hourly wage or piece rate, only that specific hourly wage rate or piece rate need be posted. However, if the position will be compensated in whole or in part by piece rate or by commission wages, that must be specified in the job posting.
The FAQs affirm SB 1162’s mandatory record-keeping rules for employers, that an employer must keep records of its employee’s job titles and wage rate history for the duration of each employee’s employment plus three years thereafter. These records must be open to inspection so that in the case of an Equal Pay Act Claim, the Labor Commissioner can then determine whether there is a pattern of wage discrepancy. If an employer fails to comply with these record-keeping obligations, the employee is entitled to a rebuttable presumption in favor of their Equal Pay Act claim.
In short, covered employers should ensure that all job postings posted on or after January 1, 2023, contain the required pay scale information. Moreover, employers should include the pay scale directly in the job posting, as opposed to linking it or providing a QR code. It is unclear whether the pay scale disclosure requirements would necessitate the employer to add this information to job postings made before January 1, 2023 that are still available to applicants. However, employers should err on the side of caution and revise prior job postings to add pay scale information. Employers that violate the new disclosure requirements may be subject to a fine ranging from $100 to no more than $10,000 per violation.