Effective January 01, 2023
Affects all Employers, Employers with 15 or more employees and Employers with 100 or more employees.
Pay equity is the view that all employees who perform similar job functions, notwithstanding job title, should be paid comparably within an established salary range regardless of an employee’s characteristics (gender, ethnicity, or race). Pay can vary within an established pay scale due to certain factors such as seniority, merit, a system of production, and/or a bona fide factor other than sex, race, or ethnicity, however, reasons for pay variances still need to be documented within the confines of the aforementioned. California’s pay equity laws were created to protect employees from earning lower wages when compared to their respective coworkers that perform similar work. Pay equity cannot be achieved overnight and as such, California legislatures continue their work to improve pay equity with the passing of SB 1162 effective 01/01/2023. At present, there are already requirements preventing California employers from asking for salary history and the need to provide pay scales upon request. Additionally, employers with 100 or more employees are required to report pay data to the California Civil Rights Department (CRD) on an annual basis. So, what does SB 1162 change?
- Employers must not request or obtain salary history, including both compensation and benefits.
- Employers must not rely on an applicant’s salary history (if disclosed by the applicant) to determine if an offer of employment should be made nor the amount to offer.
- Upon request, employers must provide the pay scale to candidates applying for a posted job and the pay scale for current positions held by current employees.
- Employers must maintain employment records pertaining to job titles and wage rates for the duration of each respective employee’s employment, plus three years upon separation of employment. These records may be subject to inspection by the Labor Commissioner.
Employers with 15 or more employees
- Employers with 15 or more employees must include the pay scale for all job postings effective 01/01/2023.
- Employers with 15 or more employees that utilize a third party to publish job postings must provide the pay scale to the third party and that third party must include the pay scale in all job postings effective 01/01/2023.
Employers with 100 or more employees
Employers with 100 or more employees must submit a pay data report to the CRD covering the prior calendar year by the second Wednesday of May 2023, and on or before the second Wednesday of May of each year thereafter.
Employers with 100 or more employees hired through labor contractors within the prior calendar year must submit a separate pay data report to the CRD. The employer must also disclose the ownership names of all labor contractors used to supply employees on the pay data report. A labor contractor is required to supply all necessary pay data to the employer in order for them to meet this requirement.
As indicated within the bill information tab under California Legislative Information each pay data report submitted to the CRD must include the following information:
1. The number of employees by race, ethnicity, and sex in each of the following job categories:
(A) Executive or senior-level officials and managers.
(B) First or mid-level officials and managers.
(E) Sales workers.
(F) Administrative support workers.
(G) Craft workers.
(I) Laborers and helpers.
(J) Service workers.
2. The number of employees by race, ethnicity, and sex, whose annual earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey.
3. Within each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate.
4. For purposes of establishing the numbers required to be reported under paragraph (1), an employer shall create a “snapshot” that counts all of the individuals in each job category by race, ethnicity, and sex, employed during a single pay period of the employer’s choice between October 1 and December 31 of the “Reporting Year.”
5. For purposes of establishing the numbers to be reported under paragraphs (2) and (3), the employer shall calculate the total earnings, as shown on the Internal Revenue Service Form W-2, for each employee in the “snapshot,” for the entire “Reporting Year,” regardless of whether or not an employee worked for the full calendar year. The employer shall tabulate and report the number of employees whose W-2 earnings during the “Reporting Year” fell within each pay band.
6. The employer shall include in the report the total number of hours worked by each employee counted in each pay band during the “Reporting Year.”
7. The report shall include the employer’s North American Industry Classification System (NAICS) code.
8. For employers with multiple establishments, the employer shall submit a report covering each establishment.
9. The report shall include a section for employers to provide clarifying remarks regarding any of the information provided. An employer is not required to provide clarifying remarks.
10. The information required by this section shall be made available in a format that allows the department to search and sort the information using readily available software.
11. If the department does not receive the required report from an employer, the department may seek an order requiring the employer to comply with these requirements and shall be entitled to recover the costs associated with seeking the order for compliance. Upon request by the department, a court may impose a civil penalty not to exceed one hundred dollars ($100) per employee upon any employer who fails to file the required report and not to exceed two hundred dollars ($200) per employee upon any employer for a subsequent failure to file the required report. Any penalty under this subdivision shall be payable to the Civil Rights Enforcement and Litigation Fund established under Section 12907. If the employer is unable to submit a complete and accurate report because a labor contractor has not provided the pay data as required under paragraph (2) of subdivision (a), the court may apportion an appropriate amount of penalties to any labor contractor that has failed to provide the pay data to the employer.