Your Rights Under California’s New Pay Transparency Law

Effective January 1, 2023, California employers will have to begin disclosing page scales to current employees and put them in job advertisements. They will also be subject to additional new reporting requirements to the California Civil Rights Department (CRD).

The increased data reporting begins with the May 10, 2023, Pay Data Report for 2022 information. Under the new law, employers must file pay data reports which include the following:

• Within each job category, employers must report the median and mean hourly rate separated by each combination of race, ethnicity, and sex.
• Reports will be due annually on the second Wednesday of May. The first report is due on May 10, 2023, to report the calendar year 2022 pay data.
• Employers with multiple locations are no longer required to submit a consolidated report. These employers must continue to submit a report for each location, however.
  • Employers with 100 or more employees hired through labor contractors have a new obligation to produce data on pay, hours worked, race/ethnicity, and gender information in a separate report. The law requires labor contractors to “supply all necessary payment data to the private employer,” but does not contain a separate mandate for the labor contractors to collect the “necessary pay data,” nor does it define the data required or address issues concerning the timing of these disclosures. The law does allow courts to apportion an “appropriate amount” of any penalties to any labor contractor who failed to timely provide required pay data to the employer.

Employers who don’t timely file pay data reports can be subject to civil penalties of up to $100 per employee for an initial failure to file and up to $200 per employee for any later failures to file. 

As of January 1, 2023, California employers must also comply with the following requirements:

• Employers with 15 or more employees must include a pay scale in all job postings (and provide that information to third parties who post those jobs). No penalty will apply for the first violation of this requirement if the employer can show that all job postings for open positions have been updated to include the pay scale.
• Regardless of their size, all employers must give an employee a pay scale for a current employee’s position at the employee’s request.

The new law also gives employers an entirely new record retention requirement. Employers must keep records of all job titles and wage rate histories for the duration of each employee’s employment and three more years after the termination of employment. The California Labor Commissioner will have the authority to inspect these employer records. 

The new annual report is due the second Wednesday of May each year for the prior year’s data. The disclosure and recordkeeping requirements are effective on January 1, 2023. 

Experienced San Francisco Employment Lawyers

Many employers might fail to comply with the law, possibly to keep employees uninformed about pay rates among the workforce. If you believe your employer is violating equal pay laws, contact our experienced employment lawyers at Minnis & Smallets right away.