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e-Alert: California Wage Transparency Laws Become Effective January 1, 2023

By December 16, 2022December 19th, 2022No Comments


Passed by Governor Newsom in September 2022, Senate Bill 1162 includes two major components of the law that will require significant changes to how employers draft job postings and how they report pay data to the state.


Expansion of Pay Disclosure Requirements

Starting on January 1, 2023, both public and private employers with 15 or more employees must include a position’s salary or hourly wage range in any internal or external job postings. (These requirements also apply to jobs posted by a third-party agency.) We will refer to this hereto as a “pay band.”

Under the existing California law, employers have been required to provide a position’s pay band to an applicant after they completed the initial interview.  Starting in January, covered employers must now provide current employees with the pay band for the position they currently hold upon request.

The law does not expressly state the definition of a pay scale; however, the data should include the salary or hourly range that the employer reasonably expects to pay for the role. It is unclear at this time whether bonuses, commissions, or other variable benefits such as PTO or health benefits should be included. Employers should monitor additional guidance from the Department of Labor Standards for such clarification.

Notably missing from the legislation is the application for remote workers. SB-1162 does not restrict the law to businesses solely based in California, so it remains unclear whether it applies to organizations that operate outside of the state but have remote employees in California, or post roles that could be performed remotely in California.

Covered employers must maintain a record of each employee’s title and wage history during the course of their employment period and for three years after separation.

Expansion of Annual Pay Data Reporting

Similar to federal pay data reporting requirements, in September 2020, California implemented the California Pay Data Reporting legislation in an effort to reduce gender and racial pay gaps. Beginning on May 10, 2023, SB-1162 expands CA Pay Data Report requirements to include:

  • The number of employees by race, ethnicity, and gender within each of the 10 specific job categories;
  • Within each of the 10 job categories for each combination of race, ethnicity, and gender, the mean and median hourly rate (using W-2s);
  • The number of employees by race, ethnicity, and gender whose annual earnings fall within each of the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics Survey (using W-2s);
  • The total number of hours worked by each employee counted in each pay band during the reporting year; and
  • For covered employers with multiple establishments, there must be a separate report that includes the above pay data for each establishment

Non-Compliance Penalties

SB-1162 also establishes a civil penalty of up to $10,000 per violation of its pay scale disclosure and job posting requirements. However, there is no penalty for a first violation of the job posting requirement if the employer can show that all job postings for open positions have been updated to include the pay scale.

The law also allows for the Civil Rights Department to coordinate with the Employment Development Department to obtain a list of businesses with 100 or more employees to ensure compliance with the report filing requirements. This document will be a public record.

CA employers should monitor the California Department of Industrial Relations for additional guidance and information as it becomes available.

Employer Next Steps

  • Employers should review all current job descriptions, postings, and prospective internal transfers to determine the reasonable salary range for an applicant or employee in each scenario.
  • Organizations should also consider the pay range for those currently in the roles as part of the process
  • Conduct a voluntary pay equity audit and implement any appropriate adjustments in advance of the January 1st effective date of these laws
  • If you would like information on how we can help with California Pay Data Reporting services, please contact us
  • If you would like information on how we can help creating pay bands/wage scales, please contact us
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This content is provided with the understanding that HR Knowledge is not rendering legal advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. The material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable laws in your jurisdiction and consult experienced counsel for legal advice. If you have any questions regarding this content, please contact HR Knowledge at 508.339.1300 or email us.