By: Sheryl Harmening
Senate Bill-1162 was signed into law Tuesday by California Governor Gavin Newsom. As highlighted in an earlier blog by DCI, the law adds new provisions to existing pay reporting requirements in the State of California.
Based on the requirements of the new law, in addition to the existing pay reporting requirements, a private employer with 100 or more employees will now be required to:
- Starting in 2023, submit pay data reports for the prior calendar year on or before the second Wednesday of May each year. This differs from the earlier reporting time frame of end of March each year.
- Submit a separate pay data report within the timeframe stated above for employees hired through labor contractors. A labor contract is defined as an “individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.”
- Report median and mean hourly rate for each combination of race, ethnicity, and sex, within each of the 10 EEO-1 job categories.
- Employers with multiple establishments are no longer required to submit a consolidated report. They are now instead required to submit a report covering each establishment.
- Courts can also impose civil penalties not exceeding $100 per employee for the first failure and not exceeding $200 for subsequent failure to file the report.
- If a company fails to file a complete and accurate report because a labor organization failed to provide them with the required pay scale information, the law states that an “appropriate amount of penalties” will be applied to the labor organization for failure to provide such information.
One of the much talked about features of Senate Bill-1162 was the pay transparency provision which would make pay scale information available to potential job applicants. California now joins New York, Washington, D.C., and Colorado to make pay information more accessible to potential job seekers.
- Prior to signing the bill into law, under existing laws, employers were required to provide pay scale information to applicants upon reasonable request. The new law will now also provide the same benefits to employees to request pay scale information for the positions in which they are currently employed.
- Employers with 15 or more employees will be required to list the pay scale for positions in their job postings. Including requiring third parties that partner with the organization to “announce, post, publish, or otherwise make known” the pay scale information in their job posting.
- Maintain records of job title and wage rate history for each employee during their employment and for three years after their employment ends.
The California Chamber of Commerce had earlier opposed bill SB-1162 asking Gov Newsom to veto the bill and the Society for Human Resource Management (SHRM) stated it could create pay compression by narrowing the gap between new and experienced employees in addition to discouraging potential job seekers from applying to positions without understanding total compensation that includes bonus, vacation time and health benefits.
With the passing of the new law, employers in the State of California should now be prepared to provide pay scale information with each of their job postings and also upon request by employees and/or applicants.