Written by Christie Del Rey-Cone and Thea Rogers

On December 27, 2022, the California Labor Commissioner’s Office released FAQ guidance (the “Guidance”) on California’s new pay transparency law (the “California Pay Transparency Law”) pay scale disclosure requirements. The California Pay Transparency Law took effect on January 1, 2023 and was enacted via amendments to the state’s Equal Pay Act and Labor Code section 432.3. Unsurprisingly, the Guidance itself is an “amendment” to the Department of Labor Standard Enforcement’s (“DLSE”) general Equal Pay Act FAQ page, with relevant pay scale disclosure information beginning at Question No. 27. 

Although this Guidance leaves several questions still unanswered (e.g., must active job postings that went live before January 1, 2023 comply with the California Pay Transparency Law?), it also provides helpful (and much needed) information regarding what constitutes a covered employer, determining an acceptable pay scale and proper disclosure.

First, the Guidance states that the new pay scale disclosure requirements apply to employers that have 15 or more employees nationwide, as long as at least one employee is located in California. Whether all employees – full-time, part-time, temporary, interns, joint, etc. – are included in the “15 or more” count is currently ambiguous, though the Guidance notes that the Labor Commissioner “interprets this [number of employees] requirement consistent with how it counts employees for the purpose of 2022 COVID-19 Supplemental Paid Sick Leave and minimum wage rates.” In which case, full-time and part-time employees would be included.

Far clearer is the guidance that pay scale disclosure requirements apply even if a covered employer engages a third party (e.g., a recruiting agency) to post “or otherwise make known” the employer’s job posting. Pursuant to the Guidance, it is the employer’s responsibility to provide applicable pay scale information to the third party, and then the third party has a duty to include this information within the posting. Importantly too, the Guidance states that the pay disclosure requirements apply even when an employer is recruiting remote workers for a position (i.e., the pay disclosure requirements apply if a job position “may ever [emphasis added] be filled in California, either in-person or remotely” [emphasis added]). The Guidance also confirms that employers must provide current employees with the pay scale for their current positions, should the employees request the information.

The Guidance also elaborates specifically on guidance regarding what employers covered by the California Pay Transparency Law will be required to include in job postings. It clarified that, in addition to a position’s pay scale, an employer that intends to pay a set hourly amount or set piece rate amount instead of a pay range may provide that set hourly rate or piece rate. Additionally, if a position’s pay rate is based on a piece rate or commission, then the piece rate or commission range the employer reasonably expects to pay for the position must be included in the job posting. Notably, employers are not required to include any other compensation or tangible benefits provided in addition to a salary or hourly wage (e.g., bonuses, tips, etc.) in a job posting.  The Guidance explicitly states that a “legally compliant job posting only requires the ‘salary or hourly wage range that the employer reasonably expects to pay for the position.’” Significantly, pay scale information must always be included within the actual job posting, not just accessible via a hyperlink, QR code or separate inquiry.

Finally, the Guidance relays the steep claims and penalties covered employers may be subject to should they fail to comply with the new pay disclosure requirements. Specifically, a non-compliant employer could face prosecution from the Labor Commissioner’s Office, a civil action for injunctive relief (and other relief a court deems appropriate), and/or civil penalties between $100 and $10,000 per violation.

As mentioned, the California Labor Commissioner’s Office will likely amend, expand and clarify this existing Guidance, and so we recommend subscribing to MSK’s Employment Law alerts to stay up-to-date on California pay disclosure requirements.  In the meantime, the Guidance and general DLSE Equal Pay Act FAQ can be found here: https://www.dir.ca.gov/dlse/california_equal_pay_act.htm