Pay Transparency Law

How California’s precedent-setting will impact employers

With the stroke of a pen, Governor Gavin Newsom signed a precedent-setting law that establishes pay transparency and modifies reporting obligations for private employers in California.
 

Under the landmark SB 1162 legislation, California employers with 15 or more employees will be required to include salary ranges in job postings, and all employers will be required to provide the pay scale for a position upon request to an applicant or current employee.

In addition, the state’s pay data reporting law, implemented in 2021, is amended to expand the employers required to submit data and require employers to calculate mean and median pay by race, ethnicity and sex, along with other minor changes.
 
With the nation’s most populous state joining the list of those requiring pay information in job postings, this law is likely to significantly move the needle on pay transparency in the United States.

What Employers Need to Know

●    The legislation, which will take effect in January 2023 is the latest example of a push to improve pay transparency efforts. New York City, Colorado and Washington also require salary ranges in job postings, and a similar bill is awaiting signature in New York state.
●    Employers who fail to comply could face civil lawsuits and state penalties.
●    Planning and implementing an approach to transparency may prove challenging for California employers subject to the law—particularly if there are existing pay disparities that come to light as a result.
●    With more states joining the pay transparency push, practices like disclosing compensation in job postings will become the expectation rather than the exception, and employers who are behind the curve may struggle to attract and retain talent.
●    Employers are likely to have significant blind spots when it comes to pay equity. According to XpertHR research, while just over 1 in 4 employers believe pay inequity exists in their organizations, over 4 in 5 employers that conducted a pay equity audit had to adjust pay as a result.

What Employers Should Do Now

It’s critical for employers to review their existing pay structure and practices with an eye to identifying and fixing disparities. For an employer with a robust pay equity strategy in place, transparency is nothing to fear and can even be a selling point.

Author Bio

Emily Scace is the Legal Editor at XpertHR. Emily has nearly a decade of experience in legal publishing, with expertise in topics including employment discrimination laws, pay equity, recruiting and hiring, and more. Visit www.xperthr.com Connect Emily S.