California Enacts New Pay Disclosure Requirements

Another new law that went into effect on January 1, 2023, Senate Bill (SB) 1162 requires (1) employers with 15 or more employees to include a pay scale in job postings; and (2) companies with 100 or more employees must report to the state the pay data of their employees and contractors by race, ethnicity and gender.
For purposes of the job posting requirement, pay scale is defined as the salary or hourly wage range that the employer reasonably expects to pay for the position. It is unclear whether this includes bonuses, commissions, health benefits or paid time off. This requirement includes third-party postings and is meant to address wage disparities at the beginning of employment.
Covered employers must maintain a record for inspection by the Labor Commissioner of each employee’s job title and wage history during their employment period and for three (3) years thereafter. This is a burdensome requirement, imposing an obligation to save records well beyond any current record retention schedule. As a result, employers should plan how to save older records before they are purged and revise any existing retention schedules to comply with SB 1162.
The new Annual Pay Data Report law significantly amends the former Pay Data Report requirements. Private employers with 100 or more employees must file an annual report with the Civil Rights Department (formerly the Department of Fair Employment and Housing (DFEH)) disclosing certain pay data according to race, ethnicity, and gender within several job categories.
Employers should immediately revise their hiring, record retention and reporting practices to conform to these new laws. We can assist.

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