On January 1, 2023, California’s Pay Transparency for Pay Equity Act (SB1162) will go into effect. This act will require employers to openly disclose their salary scales to current and prospective employees - with an extra focus on identifying disparities based on race, ethnicity, and gender.
What Does California's Pay Transparency for Pay Equity Act Require?
15+ Employees
Employers with 15 or more workers must publish details on position-specific salary ranges in job postings and disclose salary ranges to current staff members upon request. However, for information provided to current staff members, employers are only required to provide existing employees with pay scale information for the employee's current job title.
100+ Employees
Private employers with more than 100 employees must submit an annual pay data report to the California Civil Rights Department. The report will include mean and median salary information for employees by race, ethnicity, and gender in each job category. This data must also include the number of employees and contractors by race, ethnicity, and gender whose annual wages fall within each of the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics survey. In addition, the state will publish annual employee salary reports online for the public. Employers who fail to submit yearly salary data may be fined $100 per employee and up to $200 per employee for any subsequent failure.
What Should Employers Outside of California Be Aware Of?
California joins other states—including Colorado and Washington, New York City, and other municipalities—in legally mandating salary ranges be provided. Since California is the largest state to pass a transparency law, some experts expect other states and localities to follow suit.
As the pay transparency trend continues to grow, many employers throughout the United States feel pressured to provide salary information even when they are not legally required to do so. This pressure is compounded by the increase in job boards that post pay estimates and data for job postings, such as Indeed.com and Glassdoor Inc. As such, employers who are not legally required to provide salary information openly to applicants and employees may now want to weigh the benefits and drawbacks of voluntarily doing so.
This information is distributed with the understanding that CBIZ is not rendering legal, accounting, or other professional advice. The reader is advised to contact a professional before taking action based on this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.