Increased pay transparency has come to California

California employers are navigating the new pay transparency requirement which went into effect on January 1, 2023. SB 1162 requires employers to increase transparency for current employees and candidates. This post includes new information from the Department of Industrial Relations’ (DIR) FAQ’s.

Increased transparency 

All employees can now request the pay scale for their current position. Employees are not able to request pay information for a position other than their own. 

Employers with 15 or more employees are required to include the pay scale for their open position in job ads. This applies to employers with 15 or more employees nationwide as long as they have one employee in California. It also applies to a remote position if the position may be filled with someone in California. Employers should include the pay scale on external and internal job ads. 

SB 1162 defines pay scales as “the salary or hourly wage range the employer reasonably expects to pay for the position.” A new clarification has explained you can post a set rate if you don’t have a range. In addition, only the base rate of pay must be posted. You are not required to factor in items such as bonuses or overtime. If you pay employees on a piece-rate or pay commissions, reach out to your consulting team for specific guidance. Employers utilizing a third-party recruitment service will need to ensure the third-party includes the pay scale in each job ad. 

Another important clarification confirms that you cannot include a link or QR code in the job ad to the pay scale. The pay itself must be included in the job ad. 

Employers are required to maintain records of job titles and pay scales for each employee for their duration of employment and then three years after their employment ends. The record should include the employees job title and wage rate history. These records will need to be made available upon request for inspection by the Labor Commissioner. 

Pay Data Reporting Changes

Employers with 100+ employees have additional action items. Covered employers were previously required to submit the California Pay Data Report on an annual basis. Employers now need to include the mean and median hourly rates for each combination of race, ethnicity, and sex within each job category. The current job categories are: 

• Executive or senior level officials and managers

• First or mid-level officials and managers

• Professionals

• Technicians

• Sales workers

• Administrative support workers

• Craft workers

• Operatives

• Laborers and helpers

• Service workers

• 
  

Employers with multiple establishments will need to submit one report for each establishment. There is no longer a consolidated report filing available. 

There will also be a separate report for labor contractors that perform work for a covered employer. Reach out to your payroll vendor to determine if they will be able to assist with this additional requirement. 

The good news? Employers now have until the third Wednesday in May (extended from the last day in March) to complete this new report. 

What Now? 

These changes impact almost every employer in California. Reach out to our consulting team for assistance navigating these new requirements.