Part I: California’s New Law Requires Companies Post Salary Ranges on Job Listings

California just signed into legislation (09.27.22, Senate Bill 1162) that will require all employers based or hiring in the state to post salary ranges on all job listings. The new legislation also makes significant changes to California’s existing pay data reporting requirements.

The legislation will require California-based organizations in excess of 100 employees to show their median gender and racial pay gaps — a first for a U.S. state.

In recent years, more states have adopted an array of transparency laws to fight the stubborn gender and racial pay gaps. California would join Colorado, New York City, and Washington State in adopting the job-posting requirement. Currently, only Colorado’s law is in effect; New York City-based employers will have to list pay ranges starting Nov. 1. The New York state Legislature also passed a similar bill that’s awaiting Gov. Kathy Hochul’s signature.

Pay transparency on job postings is just one of many tools cities and states have adopted to close wage gaps. Some also prohibit employers from asking about pay at past jobs and from disciplining workers who share pay information.

Seven things California employers need to know about these new obligations

1. Employers Will Need to Increase Wage Transparency with Employees

Currently, California prohibits employers from asking applicants about their salary history, including compensation and benefits, during the hiring process. It also requires employers to provide the pay scale for a position upon reasonable request by an applicant. SB 1162 increases these transparency requirements in several new ways that I will report on next week.

2. You Will Need to Comply with Significant Changes to Pay Data Reporting Requirements

SB 1162 makes a number of significant changes to California’s existing law that requires large employers to submit pay data reports, including modifying the timing of when such reports must be submitted beginning in 2023.

Many employers with 100 or more employees are likely familiar with their federal reporting obligation to the Equal Employment Opportunity Commission (EEOC) through the execution of the standardized form known as the “Employer Information Report EEO-1.” Covered employers are required to annually submit the EEO-1 form to provide data about the representation of men and women of different ethnic groups in nine distinct occupational classifications or job categories.

3. Employers who Contract with Labor Contractors Need to Provide Separate Report

The new California law will also require employers with 100 or more employees hired through labor contractors to submit a separate pay data report to the California Civil Rights Department (CRD) covering the employees hired through labor contractors in the prior calendar year.

4. There is a Required Format That Must Be Followed

All employers subject to the law must submit the required data in a format that allows the CRD to “search and sort the information using readily available software.”

5. Employers With Multiple Establishments No Longer Required to Submit a Consolidated Report

SB 1162 eliminates language that requires employers with more than one establishment to also file a consolidated report that includes all employees. Employers with multiple establishments must submit a report that covers each establishment.

6. There are Significant Consequences for Non-Compliance

The law authorizes the CRD to seek a court order requiring an employer to comply with all requirements and entitles the Department to recover costs associated with seeking compliance. SB 1162 significantly raises the stakes for noncompliance by authorizing the CRD to now request a civil penalty for the failure to file the required report, up to $100 per employee for the first violation and up to $200 per employee for each subsequent violation.

7. The Time to Act to Come into Compliance is Now

As SB 1162 certainly creates additional hefty burdens on covered employers’ data reporting obligations, job posting requirements, and records maintenance duties, you are strongly encouraged to take action now.

We at Morris + D’Angelo will certainly be watching this new legislation and its effect on California employers as it develops and will share more of our thoughts next week so that you may avoid large fines associated with non-compliance, and the onerous costs of a potential lawsuit and the prying eyes of a CRD or a California Division of Labor Standards Enforcement (DLSE) investigation.

If you have questions, need clarity, or need help determining how to navigate this new law (SB 1162) to help protect, retain, or maximize your gains, please contact us at Morris + D’Angelo. This is our Expertise!

At Morris + D’Angelo, we believe that Tax Optimization is one of the most empowering and responsible things you can do to protect your growing financial assets. Tax optimization looks at a multi-year approach to minimizing tax costs. Tax avoidance is integral to tax optimization.

Daniel Morris
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