California’s New Pay Scale Disclosure Requirements Guidance
California is one of a growing list of states requiring employers to make certain pay transparency disclosures to employees and applicants. California employers already had an obligation to provide pay scales to job applicants upon request; however, as we previously reported, under SB 1162, employers must now disclose pay scales to current employees upon request, and employers with 15 or more employees must include pay scales in job postings.
While the law provided some details regarding what qualifies as a “pay scale,” as well as how the disclosure requirements apply to third parties posting jobs on behalf of a company, it still left employers with many questions. Several answers were provided to these questions when the State’s Labor Commissioner’s Office released updated guidance just days before SB 1162’s January 1, 2023 effective date. Below are key takeaways from the updated guidance for all employers with one or more California employees to consider.
Must all employees be geographically located in California to satisfy the 15-employee threshold requirement?
No. Provided they have at least one current employee in California, employers should count all employees, regardless of geographic location, when calculating the 15-employee threshold. According to the guidance, an “employee” is any individual performing any kind of compensable work for the employer (other than bona fide independent contractors). This includes salaried executives, part-time workers, minors, and new hires.
Do pay scale disclosure requirements apply to remote positions?
Yes. According to the guidance, a pay scale disclosure must be included in any job posting for a position that may ever be filled in California, either in-person or remotely.
Must an employer disclose bonus, tip, and other benefit information in a job posting?
No. An employer is not required to post any compensation or tangible benefits provided in addition to a salary or hourly wage.
Must an employer disclose piece rate or commission wages in a job posting?
Yes. If the position’s hourly or salary wage is based, in full or in part, on a piece rate or commission, then the job posting must include the piece rate or commission range the employer reasonably expects to pay for the position.
May an employer disclose a set hourly rate or set piece rate instead of a pay range in a job posting?
Yes, provided the employer intends to pay that set amount for the position.
Rather than providing the pay scale on the posting, may an employer include in the posting a link or QR code to access the pay scale information elsewhere?
No. The posting itself must list the pay scale.
Importantly, the guidance does not address whether these disclosure requirements apply to all new and existing job postings open as of January 1, 2023, or only those newly posted on or after January 1, 2023. Based on the language of “any job posting” in SB 1162, a conservative reading would include all job postings existing as of January 1, 2023, even if they were posted prior to that date.
In addition to the disclosure requirements, employers should remember that SB 1162 also imposes new record-keeping and pay data reporting obligations.
EBG will continue to monitor for updated FAQs that may help address some of the ambiguities in SB 1162 and the recently-issued guidance, though it is unclear whether or when that will occur. Accordingly, California employers should take proactive steps to maximize proper and timely compliance with all of SB 1162’s requirements, including reviewing existing job postings and templates for compliance with SB 1162, ensuring third-party compliance when applicable, and maintaining appropriate records. Employers may also consider briefing and/or training internal stakeholders such as managers, human resources professionals, and internal counsel on compliance with SB 1162. Finally, employers may also consider engaging counsel to conduct a pay equity audit to evaluate and address potential equal pay issues.
Naomi C. Friedman also contributed to this article.