September was a significant month for employment rights in California. Among other bills, Governor Gavin Newsom signed Senate Bill (SB) 1162 into law. This bill makes California the fourth state in the US to require transparency from employers, making fair pay easier to achieve statewide.
SB 1162 is a significant move toward a fairer employment landscape. Here’s what you need to know about the new law, how it works, and how it could help workers statewide.
Senate Bill 1162: California’s New Pay Transparency Law
SB 1162, which goes into effect in January, is designed to make salary and hourly rates in employment across California more transparent. The bill was introduced to reduce pay inequality in the state across both gender and racial lines. Legislators hope the bill will reduce the gender wage gap and raise disproportionally low wages earned by the Black and Latino communities.
Under the new law, companies with at least 15 employees will need to provide payment information in job posts. The specific requirements include the following:
- Employers with 15 or more workers need to provide pay scales within the body of all job listings they post, both on their own websites and job boards and third-party sites like Monster or ZipRecruiter
- Employers with more than 100 workers will provide the Department of Fair Housing and Employment (DFEH) with a comprehensive annual pay data report. This report will be publicly accessible and give a breakdown of mean and median hourly rates for race, ethnicity, and gender in various combinations.
- If an employer has more than 100 employees hired through labor contractors, it must provide a separate pay data report for those workers.
- Employers must provide a separate data report for each establishment they run.
- All workers will have the right to request the pay scale for their current role from their employer to see how their compensation compares to what the company is prepared to provide.
In short, SB 1162 requires most California employers to provide current and potential workers with a clear overview of what they should expect from their compensation.
Other Wage Transparency Laws in California
SB 1162 is not the only law that dictates wage transparency in California. In 2020, the state implemented Senate Bill 973, and it has been in effect since 2021. In fact, SB 1162 is intended to expand the compensation transparency requirements that SB 973 first implemented. These rules remain unchanged until SB 1162 goes into effect.
SB 973 first implemented the requirement that private employers with more than 100 employees need to file wage data reports to the DFEH. Employers have already reported two years of this data to the DFEH.
The current law doesn’t require employers of workers hired through labor contractors to separate out that information. It also doesn’t require employers to list the median and mean hourly rates for racial and gender categories. Instead, they must report how many employees of different demographics fall into the pay bands used by the United States Bureau of Labor Statistics. SB 1162 refines these rules to make them more beneficial for the DFEH and individual workers statewide
How Pay Transparency Could Impact You
Once SB 1162 goes into effect, companies that meet the requirements above must provide the full pay scale for all positions hiring in California. This includes businesses based outside the state hiring remote workers within its borders. This scale should consist of the high and low end of the pay rate for the position based on the company’s internal pay policies and historical pay provided to workers. As a result, almost all job postings open to California residents will clarify how much the company is willing to offer new workers.
This could have an outsized impact on marginalized workers. Studies have shown that female and black job seekers are expected to negotiate their pay less often. This may be partially responsible for the continued race- and gender-based wage gaps. Without negotiation, marginalized people are less likely to achieve their full earning potential. By mandating pay ranges in job postings, all workers are placed on equal footing for wage negotiations. People who may have been hesitant to negotiate will have the information they need to request fair payment for their work.
Posting pay data reports publicly reinforces this effect. You’ll have a better idea of how your requested salary stacks up against the average for your role. In addition, you’ll be able to spot companies where bias appears to affect the compensation and avoid them when applying for new jobs.
If you’re currently employed, you’ll be able to request the wage range for your role within your organization. This can be an invaluable bargaining chip and allow you to negotiate raises more effectively. Your employer won’t be able to hide whether you are being paid fairly for your work. If you discover you are underpaid, you can pursue a new job. You may even uncover a pattern of discriminatory compensation at your employer if wages are biased along gendered or racial lines, allowing you to take legal action to pursue fair compensation.
Pursue Fair Wages With the Law Offices of Todd M. Friedman, APC
Everyone deserves fair pay for their work, regardless of race or gender. California’s new transparency law will make it easier for employees like you to identify if you’re being paid fairly for your work or losing money to racial or gender discrimination each paycheck.
You don’t have to wait until next year to take action if you suffer from discriminatory compensation practices. At the Law Offices of Todd M. Friedman, P.C., we’re available to help you fight back against unfair pay policies. Schedule your consultation today to discover how we can help you take action and pursue fair compensation.
