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California Poised to Join States with Robust Pay Transparency Laws

Posting a job without a pay scale in California?  Think again. 

California is the latest state poised to enact a pay transparency law that impacts not only information provided in job postings but also information provided to candidates upon request.  The existing pay transparency law prohibited employers from relying on salary history when making employment decisions (including compensation decisions) and required employers to provide applicants who completed an interview the pay scale (which is defined as “the salary or hourly wage range that the employer reasonably expects to pay for the position”) upon request. Under the new law, employers must provide all applicants that pay scale upon a reasonable request, regardless of whether they have been interviewed or not.

In addition, all employers must provide a current employee the pay scale for the position the employee currently holds. Employers with 15 or more employees will be required to include the pay scale for a position in the job posting—whether that posting is through the employer or through a third party.

The legislature passed the law on August 30, 2022, and as of the date of this publication, the bill is awaiting Governor Gavin Newsome’s signature. If enacted, the law will take effect on January 1, 2023. California employers will have an additional recordkeeping burden as well, as an employer is required to maintain records of job title and wage rate history for each employee during employment and for 3 years after the end of employment. These records must be open to inspection by the Labor Commissioner in California to determine if there is a pattern of wage discrepancy.

The Growing Group

California joins a growing number of states that have enacted pay transparency laws that require an employer to disclose the pay range for a position during candidacy. The timing of the disclosure varies based on the state law—ranging from:

1. At the time of the posting (Colorado);
2. After an interview (Nevada);
3. Upon request (Connecticut and Maryland, and Rhode Island beginning in January 2023);
4. Prior to or at the time of offer (Connecticut), or
5. At the time of offer if the employee has requested the information (Washington).
The vast majority of these laws apply to transfers and promotions as well, and some have additional recordkeeping requirements. Localities are also taking up the charge, with New York City, New York; Toledo, Ohio; and Cincinnati, Ohio all requiring disclosure at various points in an individual’s candidacy.

Open Questions for California Operations, But Get Ready for Implementation

The pending legislation does not address questions that have become more critical during the pandemic—such as how the law applies to remote workers, both workers located in California working for a non-California-based business and workers located outside of California working for a California-based business, as well as how to count employees to meet the 15-employee threshold. While additional guidance is likely forthcoming from the state if the bill is signed into law, employers with employees in California (both local and remote) may wish to start thinking through the practical implications of the law—including how to incorporate pay scales into job postings with the company and third parties.

On September 27, 2022, Governor Gavin Newsom signed the law, so California employers should prepare to comply with the requirements in 2023.

  • Jennifer L. Muse

    Jenn Muse is an employment law attorney who provides proactive counsel to businesses on practical strategies, steps, and policies to address human resources and relations concerns. She focuses her practice on employment ...

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