Pay Transparency Requirements

By: Roger M. Mason, Esq., Caitlin E. Kaufman, Esq., and Rachael E. Brown, Esq.

California law currently prohibits employers from asking job applicants about their salary history and requires employers to provide job applicants with pay scale information upon request. California law also currently requires employers with 100 or more employees to file an annual pay data report with the California Civil Rights Department (“CRD”), previously the Department of Fair Employment and Housing (“DFEH”), that contains information about the race, ethnicity, and sex of their workforce in various job categories—a requirement that overlaps with the federal EEO-1 report filing requirement.

Effective January 1, 2023, SB 1162 creates new pay transparency obligations and creates a new CRD pay data reporting obligation. The law has three main components:

(1) employers with 15 or more employees will now be required to include a pay scale in all job postings;

(2) all employers will be required to disclose to their existing employees, upon request, a pay scale for their positions; and

(3) employers with 100 or more employees will be required to comply with new pay data reporting requirements and submit those reports to the CRD, separate and apart from an employer’s filing of the EEO-1 Report.

On December 27, 2022, the California Labor Commissioner’s office released Frequently Asked Questions (“FAQs”) about the new pay transparency requirements. The FAQs provide clarification on some of the questions that remained outstanding after SB 1162 was introduced. Unfortunately, the FAQs still do not clarify whether the requirements apply only to postings made on or after January 1, 2023, or if they apply to all postings that are active as of January 1, 2023. 

We recommend that employers carefully review the FAQs and contact us with any questions about the new pay transparency law and how it applies to your business. 

For more information about any of these employment legal updates, please contact our employment team at 408-356-3000 or via email: Roger Mason at rmason@smwb.com, Caitlin Kaufman at ckaufman@smwb.com, or Rachael Brown at reb@smwb.com.