California Governor Gavin Newsom Signs Update to State’s Salary Transparency Act, Establishing New Salary Disclosure Requirements | Dorsey & Whitney LLP

Governor Newsome signed SB 1162, which requires employers to make salary ranges for positions available to applicants and employees and expands salary data reporting requirements to better identify pay disparities based on gender and the race.

Payroll data reports

California currently requires employers with at least 100 employees who have at least one employee in California to report wage data disaggregated by employee gender, race, and ethnicity annually to the Department of Civil Rights (formerly known as the Department of fair employment and housing).

Under SB 1162, a private employer with 100 or more employees must submit a wage data report to include the median and average hourly rate for each combination of race, ethnicity, and gender in each job category. It also requires employers to submit a separate salary data report for employees hired through contractors. This bill also removes the provision of the existing law that allowed employers to comply by submitting an EEO-1 report instead of salary data. These reports must be filed no later than the second Wednesday of May 2023 and the second Wednesday of May for each subsequent year.

Salary Scale Transparency

California law currently requires an employer, upon request, to provide the salary range for a position to a job seeker. SB 1162 extends these requirements as follows:

• Upon request, employers must provide employees the salary scale of the position currently occupied by the employee.
• Employers with 15 or more employees must include the salary range for a position in any job posting.
• Employers must keep records of the job title and wage rate history for each employee for a specified period, so that they can be inspected by the labor commissioner.

The law also requires the commissioner of labor to investigate complaints alleging violations of these requirements and would authorize the commissioner to order an employer to pay a civil penalty if it finds a violation.

California has been a leader in pay transparency legislation, and versions of similar laws exist in Colorado, Washington State, and New York City.