In keeping with a current trend across the country, the California Senate recently sent a bill to the governor’s office that will require certain employers to include compensation information in job postings along with other disclosure requirements. of the salary scale. As we previously reported on ColoradoNew York State and New York City, there are subtle differences between each jurisdiction’s pay transparency laws and therefore employers should seek guidance in complying with them.
Job offer requirements (employers with 15 or more employees)
If the law is signed into law — and all indications are that Gov. Gavin Newsom will — the California bill’s posting requirements will apply to any employer with 15 or more employees. Covered employers must include the salary range (defined as the salary or hourly wage range that the employer reasonably expects to pay for the position) in all job postings. Unlike other pay transparency laws, the bill does not say whether it applies to job postings for positions that could or will be filled in California.
The pay scale must also be included in any third party publication if a covered employer engages a third party to do so. Employers who hire third parties to administer job postings should consider adding an indemnity clause in favor of the employer to any service contract.
Salary scale disclosure upon request (all employers)
In addition to job posting requirements, all employers (regardless of size) must provide the salary range when requested by a current employee or candidate (either for the position in which the employee is currently employed or for the position for which a candidate is applying).
Records retention (all employers)
The bill also requires employers to keep records of job titles and wage rate history for each employee for the duration of employment and for three years after employment ends. These registers will be open to inspection by the labor commissioner.
Payroll data reporting requirements (private employers with 100 or more employees)
If enacted, the California bill’s payroll data reporting requirements will apply to any private employer with 100 or more employees. The bill does not specify that such employees must be employed in California, but defines employees broadly as anyone on an employer’s payroll (including part-timers) and for whom the employer is required to withhold federal social security contributions.
Covered employers must submit a wage data report to the Department of Civil Rights (formerly known as the Department of Fair Employment and Housing until its name changes in July 2022) no later than the second Wednesday May 2023 (May 10, 2023) and on or before the second Wednesday in May for each subsequent year. An employer who has 100 or more employees hired through labor contractors in the previous calendar year must also submit a separate compensation data report covering employees hired through labor contractors in the previous calendar year.
The salary data report should include a “snapshot” of the number of employees by race, ethnicity and gender in specific job categories, and the number of employees by race, ethnicity and gender whose annual earnings fall within the earnings ranges used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey (and the total number of hours worked by each employee counted in each earnings bracket), the median and average hourly rate of these employees in each job category for each combination of race, ethnicity, gender and employer NAICS code.
Employers with multiple establishments will be required to submit a separate report for each economic unit producing goods or services. The bill also allows the department to publish aggregate reports based on the data obtained (with the caveat that aggregate reports will be reasonably calculated to prevent association of the data with any company or person).
Penalties / Private Right of Action
Penalties associated with failing to comply with salary scale disclosure or record retention requirements range from $100 to $10,000 per violation (with the caveat that no penalty will apply to any employer which violates the job posting requirement first if an employer can demonstrate that all job postings have been updated to include the salary range). Penalties associated with failure to submit the Paydata Report can be up to $100 per employee for the initial failure to submit the report and up to $200 per employee for any subsequent failure to submit the report.
The bill provides that anyone who has been harmed by wage disclosure requirements can file a complaint with the labor commissioner and further provides that individuals can bring a civil action for injunctive relief and “other relief.” Given the creation of a private right of action and California’s climate for employment litigation and class actions, employers operating in California should consider seeking immediate legal counsel to mitigate these litigation risks.
The bill is currently awaiting the Governor’s signature, which has until September 30e sign or veto it. We will continue to monitor this bill and post updates as they become available.