By Rose Huelskamp Serrano and Jonah Mekebri
Effective January 1, 2023, California employers’ obligations regarding transparency of pay and reporting of pay data will undergo significant changes. These changes include employers with over 100 employees to report pay information and various employee demographics to the state in May of each year, beginning in May 2023, and employers with 15 or more employees disclosing a pay scale in job postings.
Government Code § 12999 and Reporting Pay Data
Private employers that employ over 100 employees will be required to submit a pay data report to the Civil Rights Department within the Business, Consumer Services, and Housing Agency (the “Department”) covering the prior calendar year on or before the second Wednesday of May each year, beginning with May 2023. Employers are required to submit these pay reports regardless of whether they are required to file an EEO-1 report.
Under Senate Bill 1162, this report must include the following information:
- The number of employees by race, ethnicity, and sex in several enumerated job categories including executive or senior level officers and managers, mid-level officials and managers, professionals, technicians, craftworkers, laborers and helpers, service workers, and other categories.
- The number of employees by race, ethnicity, and sex, whose annual earnings fall within each of the pay bands used by the United State Bureau of Labor Statistics in the Occupational Employment Statistics Survey.
- The total number of hours worked by each employee counted in each pay band.
- The median and mean hourly rate within each job category for each combination of race, ethnicity, and sex.
Private employers that employ 100 or more employees hired through labor contractors within the prior calendar year will be required to submit a separate pay data report to the Department covering the employees hired through labor contractors in the prior calendar year. This separate report shall include all the information listed above. Additionally, private employers are required to disclose on the separate pay data report the ownership names of all labor contractors used to supply employees. Senate Bill 1162 requires the labor contractor to supply all necessary pay data to the private employer. A “labor contractor” is an individual or entity that supplies, with or without a contract, a client employer with workers to perform labor in the client employer’s usual course of business.
For employers with multiple establishments, the employer must submit a report covering each establishment. “Establishment” means an economic unit producing goods or services.
Employers may be subject to civil penalties, calculated by the number of employees, for each failure to report.
Labor Code § 423.3 and Pay Transparency
Employers, public or private, with 15 or more employees must now include the pay scale for a position in any job posting. Additionally, if an employer engages a third party to announce, post, publish, or otherwise make known a job posting, the employer must provide the pay scale to the third party and ensure that the third party includes the pay scale in the posting. “Pay scale” means the salary or hourly wage range that the employer reasonably expects to pay for the position.
Upon request, all employers, regardless of number of employees, shall provide an employee the pay scale for the position in which the employee is currently employed. All employers must also maintain records of a job title and wage rate history for each employee for the duration of employment plus three years after the end of employment.
A person who claims to be aggrieved by a violation under § 423.3 may file a complaint with the Labor Commissioner and bring a civil action for injunctive relief and any other relief that the court deems appropriate. If an employer fails to maintain records, there will be a rebuttable presumption in favor of an employee’s claim. Additionally, employers may be liable for civil penalties up to $10,000 per violation under this section.