Under current CA “Pay Transparency” law, an employer is prohibited from soliciting, or relying on salary history voluntarily provided as a factor in determining whether to offer a prospective employee a job, or what pay to offer them. Employers are also required to disclose pay scales for existing positions on request of a prospective employee. There are also existing reporting requirements for employers with 100 or more employees. Effective January 1, 2023, there are new and additional compliance requirements CA employers need to be aware of.

• Employers with 15 or more employees will now be required to identify a pay scale within any internal or external job posting.
• All employers must provide a pay scale to existing employees for their position upon request.
• All employers must maintain records of job title and wage rate history for each employee for the duration of employment plus three years after the end of employment.
• Employers with 100 or more employees have new pay data reporting requirements.
  • This now includes employers with 100 or more “workers”, whether employed directly or through a labor contractor such as a staffing agency.
  • A separate report is required for those workers who are not directly employed, and the source of those workers is required to provide the necessary information to the employer to enable reporting compliance.
  • In addition, the law will now require employers with multiple establishments to file a separate report for each, whereas current law allowed a
    single combined report.
  • Employers are no longer allowed to comply by filing a copy of their EEO-1 report.

Employers covered under the new law must now report to the CA Civil Rights Dept. on, or before the 2nd Wednesday in May each year (May 10 for 2023) the number of employees by race, ethnicity, and sex in each of the following 10 job categories for the reporting period is a single pay period between Oct 1 and Dec. 31 in the reporting year.

• Executive or senior level officials and managers
• First or midlevel officials and managers
• Professionals
• Technicians
• Sales workers
• Administrative support workers
• Craftworkers
• Operatives
• Laborers and helpers
• Service workers

Employers must log the median and mean hourly rate within each job category above, for each combination of race, ethnicity, and sex. Total W2 earnings for the year are used for these calculations, whether the employee worked a whole year, or not. In addition, employers must report the total number of hours worked for each employee counted in each pay band during the reporting year. For employers attempting to comply without assistance, it is highly recommended they familiarize themselves with the CA Civil Rights Department’s website and reporting portal, which have not currently been updated for the 2023 reporting year. Stay tuned.

Add failure to comply with the new law to the long list of potential PAGA penalty violations Plaintiff attorneys will be salivating over for the foreseeable future.