California Enacts New Law Mandating Pay Range Disclosures In Job Listings

Written by Jeremy Mittman

Is your company hiring?  If so, it’s important to know that California has passed new requirements for job postings and important disclosures to applicants and employees.

Signed by Governor Gavin Newsom on September 27, 2022 and taking effect January 1, 2023, the new law will require every California employer with more than 15 employees to disclose a position’s pay range in the job listing.

Previously, pursuant to Labor Code § 432.3(c), employers were required to disclose the pay range for a job after the first round of interviews, and only upon a candidate’s request. 

The newly signed law is the latest in a series of pay transparency measures enacted in California in recent years and will become one of the country’s most aggressive laws aimed at eliminating “secrecy” surrounding employee compensation. 

Importantly, current employees will also have the right to receive from their employer, upon request, the pay scale for the position in which they are employed. 

Employers of more than 15 employees must maintain job title and wage history records for each employee.  The law establishes a presumption in favor of the employee if the employer fails to maintain such records.

Additional Government Reporting Obligations

Employers of at least 100 employees are already required to annually report pay data breakdowns by sex, race, and ethnicity to the agency formerly known as the Department of Fair Employment and Housing, which was renamed the Department of Civil Rights, or CRD, in July of this year.  Under the new law, these annual reports now must disclose for each sex, race, ethnicity, and each combination thereof, median and mean hourly rates of pay within each job category.  The CRD will maintain these reports for at least ten years.  Previously, this requirement could be satisfied by submitting a copy of the employer’s Employer Information Report (EEO-1) already required by federal law for applicable employers; however, the new law deletes that provision and instead now requires a California-specific pay data report.

Employers also must report similar data for employees hired through contractors.

The law, passed by the legislature and sent to the governor as Senate Bill 1162, establishes new civil penalties to aid enforcement of the reporting requirements and empowers the Labor Commissioner to investigate alleged violations.  Specifically, a court can impose a civil penalty of $100 per employee for any employer who fails to file the required report, which escalates to $200 per employee for subsequent violations.  Violations of the pay range disclosures to applicants are the subject of a new private cause of action, with resulting possible civil penalties ranging from $100 to $10,000 per violation.  These limits apply only to claims brought before the Labor Commissioner; the courts, however, will be permitted to award injunctive relief and any other relief the court deems appropriate.

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