iOn September 27, 2022, Governor Gavin Newsom approved SB 1162 to significantly expand the pay reporting and pay scale requirements for California employers. These requirements are effective January 1, 2023.
Pay Reporting Requirements
SB 1162 amends California Government Code § 1299 and requires private employers with 100 or more employees to submit a pay data report (the “Report”) to the Civil Rights Department (the “Department”) by the second Wednesday of May each year beginning in 2023.
The Report must include the following information from the prior calendar year:
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The number of employees by race, ethnicity and sex in the following job categories:
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Executive/senior-level officials and managers
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First/mid-level officials and managers
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Professionals
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Technicians
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Sales workers
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Administrative support workers
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Craft workers
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Operatives
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Laborers and helpers
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Service workers
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The mean and median hourly rate for each combination of race, ethnicity, and sex within each of the above-listed job categories;
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The number of employees by race, ethnicity, and sex whose annual earnings fall within each pay band used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics Survey;
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The employer’s North American Industry Classification System (NAICS) code; and
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A section for the employer to provide clarifying remarks regarding the information provided, if any.
Private employers with 100 or more employees hired through labor contractors (i.e. an individual/entity that supplies a client employer with workers to perform labor within the client employer’s usual course of business) must submit a separate report to the Department that includes the information above for those employees, along with the names of all labor contractors used to supply employees.
Private employers with more than one establishment (defined as an economic unit producing goods or services) must submit a report covering each establishment.
The Report must be in a format that the Department can search and sort through readily available software.
If a private employer does not comply with these requirements, the Department may seek an order for compliance and recover associated costs. Additionally, upon request of the Department, a court may impose a civil penalty of no more than $100 per employee for the employer’s failure to file the Report, and a civil penalty of no more than $200 per employee for the employer’s subsequent failure.
Pay Scale Requirements
SB 1162 amends California Labor Code section 432.2 and imposes new wage disclosure requirements on all private and public employers with 15 or more employees.
Since 2018, Labor Code Section 432.2 has prohibited California employers from relying on the salary history of a job applicant in deciding whether to extend an offer of employment or what salary to offer, unless the applicant voluntarily discloses this information. Employers have also been prohibited from seeking, either personally or through an agent, salary history information about an applicant.
SB 1162 expands Section 432.2 to also require covered California employers to affirmatively provide pay scale information (i.e. the range of the salary or hourly rate the employer expects to pay for the position) on job postings, including postings made by third-party job sites used to advertise positions. Covered employers must also provide pay scale information upon request to current employees for their current position.
An aggrieved applicant or employee may file a complaint with the Labor Commission within one year of discovering the employer’s violation. The Labor Commissioner impose may order the employer to pay a civil penalty of no less than $100 and not to exceed $10,000.
Employers are required to maintain a record of each employee’s job title and wage history during employment and for three years following the termination of employment. An employer’s failure to keep records in violation of this section creates a rebuttable presumption in favor of an employee’s claim filed with the Labor Commissioner.
