California Proposes Bill to Expand Employer Salary Transparency and Salary Data Reporting | CDF Labor Law LLP
On February 17, 2022, Senate Bill 1162 was introduced to further impose “pay transparency” and “pay reporting” on employers. SB 1162 offers two major changes:
- Require employers to submit wage data reports to the Department for Fair Employment and Housing (“DFEH”), including median and average hourly rate for employees categorized by race, ethnicity and gender in specified job categories; and
- Require California employers to proactively provide pay scales in job postings.
SB 1162 Proposed Amendment to Government Code Section 12999
Current law requires California employers with 100 or more employees, with at least one employee in California, to submit annual reports of salary data to the DFEH. The statutory aim is for employers to self-assess pay disparities by gender, race and ethnicity in order to encourage voluntary compliance with equal pay and anti-discrimination laws. discrimination.
Currently, employers must declare annually to the DFEH:
- The number of employees by race, ethnicity and gender, during the snapshot period from October 1 to December 31 of the reporting year.
- The number of employees by race, ethnicity, and gender whose annual earnings fall within each of the salary bands used by the U.S. Bureau of Labor Statistics.
- The total number of hours worked by each employee plus paid time off (such as paid sick time and vacation).
- A certification that the information in the payroll data report is accurate and prepared in accordance with Government Code Section 12999 and DFEH instructions, together with the representative’s name, title, signature and date signed of the certifying company.
- The name, title, address, phone number, and email address of a person who can be contacted about the report.
If SB 1162 is enacted, employers’ reporting obligations will expand. Employers will be required to submit wage data reports that include the median and average hourly rate in specific job categories, by race, ethnicity and gender. Salary data reports will be required for workers in the following job categories: (1) executives or senior executives and managers; (2) first- and middle-level officials and managers; (3) professionals; (4) technicians; (5) vendors; (6) administrative support workers; (7) artisans; (8) officers; (9) laborers and helpers; and (10) service workers.
SB 1162 will also extend the wage data reporting requirement to employers who use contractors. Employers with 100 or more employees hired through contractors will be required to submit a separate compensation data report to DFEH. And, the new law will require employers to disclose ownership of all labor contractors used to supply employees. A “labour contractor” is defined as a person or entity that provides, with or without a contract, labor to a client employer to perform work in the normal course of the client employer’s business. This includes temporary workers and workers providing services through placement agents.
In addition, SB 1162 will require the DFEH to post each private employer’s salary data report on a public website so that the information is accessible and, theoretically, in a way that does not identify employees by their name.
SB 1162 also adds penalty provisions for failure to file the required compensation data report. Existing law under Section 12999 of the Government Code does not impose civil penalties. However, if SB 1162 is enacted, this bill “will allow a court to impose a civil penalty not exceeding one hundred dollars ($100) per employee on any employer who fails to file the required report and not exceeding two one hundred dollars ($200.) per employee to any employer for subsequent failure to file the required report Any penalty imposed would be paid to the Fair Employment and Housing Enforcement and Litigation Fund.
Finally, the proposed measure will change the deadline for submission to the DFEH from March 31 of each calendar year to May 11, 2023 and to the second Wednesday of May of each year thereafter.
SB 1162 Proposed Amendment to Labor Code Section 432.3
SB 1162 also proposes to expand pay transparency laws under section 432.3 of the Labor Code. Applicable law requires all California employers to provide applicants with a salary range upon reasonable request. The proposed measure will require all California employers to proactively provide pay scales for vacant positions in job postings, not just upon request. In addition, SB 1162 will require all California employers to advertise, post, advertise, or otherwise make known any promotion opportunity and salary range for the position to all current employees on the same calendar day as the role is publicly posted, and before make a promotion decision.
SB 1162 provides a private right of action for injunctive relief and such other relief as a court deems appropriate. In addition, an aggrieved employee may file a written complaint with the Labor Commissioner. SB 1162 allows the labor commissioner to order an employer found guilty of a violation to pay a civil penalty between $500 and $10,000 per violation. These funds would be deposited in the Labor Enforcement and Compliance Fund. If an employer fails to keep records regarding employee pay scales, there is a rebuttable presumption in favor of the employee’s claim.
Senate Judiciary Committee Hearing
SB 1162 is scheduled to be heard before the Senate Judiciary Committee on April 26, 2022. The CDF will continue to monitor this bill and provide relevant updates.