California ENACTS Pay Transparency Law to Address Ongoing Pay Inequity

On September 27, 2022, in an ongoing effort to combat gender-based pay inequity among California workers, Governor Newsom signed S.B. 1162, creating new pay disclosure and reporting requirements for employers.  According to data from the U.S. Bureau of Labor Statistics, women in California make 88 cents for every dollar a man makes for the same work, and the wage gap is greater for women of color.

The new law requires employers with 15 or more employees to include a pay scale in any job posting and to provide a pay scale to current employees upon request.  A pay scale is the “salary or hourly wage range that the employer reasonably expects to pay for the position.”  The law also requires all employers to maintain records of job title and wage history for each employee until three years after the end of employment, and the Labor Commissioner has authority to inspect these records to determine if there is a “pattern of wage discrepancy.”  If an employer fails to comply, an aggrieved party may file a complaint with the Labor Commissioner or a civil action seeking injunctive relief, and the Labor Commission may impose a civil penalty ranging from $100 to $10,000 per violation.  The failure to maintain the required records creates a rebuttable presumption in favor of the aggrieved party’s claim.

S.B. 1162 also builds on an existing law that requires companies with more than 100 employees to provide annual reports to the Civil Rights Department (“CRD,” formerly the DFEH) containing pay data organized by establishment, job category, sex, race, and ethnicity.  The new law expands the categories of information that companies must include in their annual reports.  For instance, employers must now provide the mean and median hourly rates for each combination of race, ethnicity, and sex within each of ten job categories, such as executive-level employees, laborers, and service workers.  The CRD can seek a court order requiring compliance, and a court may impose civil penalties of up to $100 per employee per violation, and up to $200 per employee for continual violations.

S.B. 1162 amends Labor Code section 432.3 and Government Code section 12999, and takes effect January 1, 2023.

Posted by Ally Girouard