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Attorneys Sara Bradley, Marinda Neumann and Lindsay Nakagawa.

Gov. Newsom signs pay disclosure law

On Behalf of | Oct 18, 2022 | Employment Law

Starting in January, an estimated 200,000 California companies with 15 or more workers must reveal pay levels on all job postings. On Sept. 27, Gov. Gavin Newsom signed a so-called pay transparency bill into law. The new rules follow similar laws in other states requiring pay transparency to uncover disparities between men and women and whites and minorities.

The legislation also mandates that California companies with 100 or more employees report mean and median pay levels for several job categories according to gender and race, along with salaries for contractors. Those requirements will affect roughly 20,000 employers and are the first such rules in the nation.

Opponents argue the new law undermines employers

The California Chamber of Commerce opposed the legislation saying it inhibits employers’ hiring abilities and subjects companies to lawsuits and excessive penalties of up to $10,000 per employee for alleged violations. CalChamber says the associated costs and burdens will discourage growth and expansion in California and inhibit employers’ ability to offer increased pay and benefits to new and existing employees.

What is required of employers?

The new law goes into effect on Jan. 1, 2023, revising California Labor Code 432.3. Starting then, employers with 15 or more employees, including staffing companies, must disclose pay scale data for each advertised job.

This is required whether they post the job themselves or have a third party, such as Indeed, handle the posting. Employers must supply the pay scale information to the third party to include in the advertisement. “Pay scale” is the hourly wage or salary range the employer expects to offer.

In addition to providing pay information to applicants, employers must also provide current employees with the pay scale for their positions upon request. Companies should be preparing now for an onslaught of requests when the law goes into effect.

Annual pay scale reports begin for larger employers in 2023

Companies with 100 or more workers must also report pay data each year to the Civil Rights Department for several job categories, including:

  • Senior-level managers
  • Professionals
  • Sales workers
  • Laborers
  • Service workers
  • Professionals
  • Technicians

The first report is due May 10, 2023, and each year after, by the second Wednesday in May. Failure to report the information can result in a fine of $100 per employee for a first offense and $200 per employee for further violations. It is advisable for California employers to revise their policies and practices, or consult with an experienced employment law attorney, as soon as possible to prepare for the new requirements.