8 Important Things to Know about the Pay Transparency Act (SB 1162)

The ever-changing landscape of California employment law has changed again – and in a big way for many workers and employers – with the Pay Transparency Act. Understanding the new law can help employees get the fair wages they deserve.

Here are eight things you need to know about the Pay Transparency Act.

8 Essentials about the Pay Transparency Act

• The Pay Transparency Act Supports Transparency In Workers’ Wages

The act, often known as Senate Bill 1162 (SB 1162), promotes transparent wages in several ways. The Pay Transparency Act compels employers to disclose pay ranges, for example, and at a worker’s request. It also creates a basis for employees who feel they have been paid unfairly to bring about a claim  and provides a way for the state government to monitor equal pay.

• The Law Is New, But Builds On Existing Regulations

California Governor Gavin Newsome signed the bill, known as Senate Bill 1162 (SB 1162) into law in September of 2022 and it took effect on January 1, 2023.

While this new law is separate from preexisting regulations, it does build upon state and federal equal pay laws. The law adds new requirements for hiring, recruiting, and payroll.

• SB 1162 Affects Most California Companies

Like the laws before it, the Pay Transparency Act law affects any company that operates in and hires from the State of California. Under the act, employers with more than 15 workers must disclose the pay ranges in their job postings – even for job listings through third-party staffing agencies, such as ZipRecruiter and LinkedIn.

Those with 100 or more employees and/or 100 or more contractors must also provide annual pay data reporting submissions. Employers with at least 100 employees and at least 100 contractors must file separate reports for employees and for contractors.

Employers had to send their first pay data reports on May 10, 2023. After that date, employers must submit their pay data reports every year on the second Wednesday of May. Employers who fail to do so face stiff penalties.

• Penalties Can Be Stiff

Employers who fail to comply can face penalties that range from $100 to $10,000 per violation. What’s more, if an employer cannot produce the pay records necessary in a claim, the courts will likely side with the employee who makes the claim.

• The State Of California Enforces The Law

California Civil Rights Department (CRD) enforces most of the new requirements of the Pay Transparency Act. The Division of Labor Standards Enforcement and the Department of Industrial Relations share responsibility for enforcing the requirement for pay scales on job postings.

• Employers Must Produce The Pay Scale If An Employee Asks For It

If an employee requests to see the pay scale for their current job description, their employer must disclose it. Because this is a new law, many employers may not have been keeping records of their pay, so some may struggle to provide pay information upon request.

• Employers Must Keep Pay Records For 3 Years

Employers must maintain records of each worker’s job title and wage history. They must keep these records for each worker for three years beyond that worker’s employment.

• The Reports Provide Insight Into The Pay For Gender And Race/Ethnicity

Pay can differ significantly among some workers, especially women and people of color.

In their annual reports, employers must also identify the mean and median pay data for every combination of gender and race. The information provided will help provide insight into any pay gaps by gender or race/ethnicity.

Contact D.Law to Learn More about the Pay Transparency Act

The Pay Transparency Act affects businesses and workers in California. If you believe that your employer has not been transparent about the pay range for your job description, contact your employment law attorney at D.Law by calling (818) 275-5799.