New California Law Requires Pay Transparency

Santa Clara, CAA new California labor bill, which takes effect next January 2023, will require employers with over 15 employees to list pay and salary ranges on all job postings. The Senate Bill 1162  is key to achieving pay equity and the lack of pay transparency has disproportionately affected both people of color and female employees, according to proponents of the bill.

A similar bill, SB 973, was passed in 2019, but it only required employers with over 100 employees to submit pay reports to the Department of Fair Employment and Housing. Salary and pay information was not required to be publicly available. According to a recent analysis of pay data required under SB 973, California women in 2020 lost $46 billion due to the gender pay gap and people of color in the state lost $61 billion due to the race pay gap. And according to the U.S. Department of Labor, women in the U.S. currently earn 82 cents for every dollar that a man earns.

Pay Transparency Key

This new bill is designed to help close the wage gap by requiring the disclosure of salary ranges on all job postings, and to make employer internal promotional opportunities available to current employees. Because all companies will be required to report pay data broken down by race, ethnicity, and sex for both direct employees and employees hired through a third-party staffing agency, SB 1162 will help identify the gender and race-based pay disparities at every stage of the employment process, from hiring, to promotion, and ongoing employment.

Sen. Monique Limón first introduced SB 1162 in February 2022. On her website she says:
“Pay transparency is key to achieving pay equity. SB 1162 will help identify the gender and race-based pay disparities by requiring pay transparency at every stage of the employment process, from hiring, to promotion, and ongoing employment,” said Senator Limón. “We must increase pay transparency in order to close the gender and racial wage gap, which prevents women, particularly women of color, from achieving economic security.”

“Transparency is key if we want to close the gender and race wage gaps, which still persist in nearly every industry and occupation in this country. Providing salary ranges on job postings empowers women and other workers with information they need to make the best decisions for their families and negotiate for the income they deserve,” said Jessica Ramey Stender, policy director and deputy legal director at Equal Rights Advocates, and reported by Law360. “California has led the nation on equal pay protections and this bill is the next logical step to continue that progress and keep forging a path for other states to follow.”

As of January 1, 2023 California will join other states and cities that have enacted similar pay transparency laws.