By Jennifer Jacobus, PHRca, SDEA Director of HR Services
To further the fight on pay inequity, on September 27, Governor Newsom signed a bill that will require pay transparency, at one level or another, for most employers. Starting January 1, 2023 the following changes and updates will apply based on an employer’s company size:
- 15 or more employees – employers must include pay scales in each job posting for positions in California. Employers will also need to provide pay scales to current California employees upon request
- 100 or more employees – added obligations for employers to include both the median and the mean hourly rates by establishment, job category, sex, race, and ethnicity in their annual reporting. This is a new requirement in the already mandated reports required by the California Civil Rights Department (CRD, formerly DFEH)
- 100 or more employees provided by “labor contractors” (i.e., staffing agencies) must submit a separate annual report to the CRD relating to those contractors
While California has already required employers (regardless of size) to provide applicants with a pay scale, upon request, this new requirement takes that one step further with the mandated inclusion of pay scales in job postings.
Employers will be required to keep records on wage history, including job title, for each employee while employed, and for three years after termination. Employers who fail to comply with these recordkeeping requirements may be subject to a presumption in favor of an employee’s claim of wage disparity.
Penalties for not complying with data reporting start at $100 per employee for the first violation and up to $200 for each subsequent violation. Penalties for not complying with a request for a pay scale could lead to civil penalties ranging from $100 to $10,000 per violation.
Employers are encouraged to start developing policies and practices regarding pay transparency sooner rather than later. This will give companies an opportunity to address any potential pay discrepancies before current employees uncover them. And be on the lookout for SDEA’s new training program “Creating Transparent Compensation”.
If you need help or have questions, give us a call, 858-505-0024. At SDEA, we are not just here for you, we are HeRe with you.