California Provides FAQs on New Pay Disclosure Requirements

Background:

Effective Jan. 1, 2023, Senate Bill 1162 amends the state’s Equal Pay Act as follows:

• Upon request, all employers must:
• All employers must retain records of a job title and wage rate history for each employee. The records must be kept for the duration of employment plus three years after the end of the employment.
• An employer with 15 or more employees must include the pay scale for a position in any job posting. If the employer engages a third party to announce, post or publish a job posting, the employer must provide the pay scale to the third party. The third party is required to include the pay scale in the job posting.

These changes are codified underLabor Code Section 432.3.

New Guidance:

The DIR has updated its answers tofrequently asked questions about equal payto provide guidance on the new requirements. Here are some key points the updates address.

Defining pay scale

Under the law and guidance, pay scale is defined as a salary or hourly wage range. The guidance further provides that if the position’s hourly or salary wage is based on a piece rate or commission, then the piece rate or commission range the employer reasonably expects to pay for the position must be included in the job posting. Employers are not required to include additional compensation, such as bonuses, tips or tangible benefits when posting a salary or hourly wage. The employer may include this information to make its recruitment efforts more competitive, and employers are cautioned other forms of compensation may be considered for equal pay purposes. A legally compliant job posting only requires the “salary or hourly wage range that the employer reasonably expects to pay for the position.”

Including the pay scale in job postings

The Labor Commissioner interprets the requirement to include the pay scale in any job posting to mean that the pay scale must be included within the job posting itself if the position may ever be filled in California, either in-person or remotely. Employers wouldn’t comply with the requirement if they simply link to the salary range in an electronic posting or include a QR code in a paper posting that will take an applicant to the salary information, according to the guidance.

Determining whether an employer has 15 or more employees

Although the statute doesn’t specify how employers should count employees, the Labor Commissioner interprets this requirement consistent with how it counts employees for the purpose of 2022 COVID-19 Supplemental Paid Sick Leave and minimum wage rates, as detailed inpreviously issued FAQs on the topic. As such, an employer will be deemed to have met the employee threshold if they have 15 or more employees at any point in a pay period, and at least one employee is currently located in California. For example, an employer with 14 employees in Oregon and one employee in California would be covered by the requirement to include the pay scale in any job posting.