Explaining California’s New Pay Transparency Act SB 1162

A man reviews documents at a desk, SB 1162 went into effect in California on January 1, 2023.

Explaining California’s New Pay Transparency Act SB 1162

California’s most recent Pay Transparency Law went live on January 1, 2023. SB 1162 requires business owners with employees in California to track and report payscale ranges. Requirements vary for small and large businesses. Linda Duffy, President and Founder of Ethos Human Capital Solutions, led a PayrollCentric presentation to break down SB 1162.

SB 1162: The Most Important Changes

Previously, if a job candidate requested the pay scale range for the applied position, an employer would have to provide it. SB 1162 expands that notion to require the pay range to be reported in all job postings, and to current employees upon request. This could lead to some tricky conversations for employers who haven’t been keeping records or operating with transparency.

Though SB 1162 is separate and unique from preexisting laws, Duffy says it is an expansion of equal pay laws that already exist federally and in the state. The states of Colorado and Washington, and New York City have similar requirements, while several other states have pending legislation.

The bill includes further record retention requirements as well. You must keep a record of an employee’s position and wage history for 3 years after their employment has ended.

Essentially, Duffy says, “they are trying to provide a way for the government to monitor equal pay for employees to have a basis for bringing a claim if they believe they’ve been paid unfairly.”

SB 1162 Applies to All Employers

If you have even a single employee in California, SB 1162 applies to your company. Pay scale disclosure must be provided to current employees upon request and position/pay history records need to be kept for employees three years beyond employment.

SB 1162 Requirements for Employers with 15 or more Employees

In addition to pay-scale disclosure for current employees and 3-year record keeping, businesses with 15 or more employees must provide pay scale range on all job postings with a salary or hourly wage that the “employer reasonably expects to pay for the position.”

SB 1162 Requirements for Employers with 100 or more Employees

Large businesses must adhere to pay scale disclosures for current employees upon request and for all job postings. In addition to keeping 3 years of employment records, businesses with 100 or more employees must provide data that covers pay rates for all combinations of gender/race/ethnicity demographics in different positions. These companies must provide data from fourth quarter pay periods on or before the second Wednesday of May, which is May 10 in 2023. Separate reports should be provided if your business has multiple locations.

SB 1162 Penalties & Job Posting Disclosures

Pay scale must be provided in job postings, whether in-house, or through third-party recruitment platforms (like ZipRecruiter or LinkedIn). Range should be listed for both external and internal positions and, again, should include the hourly or salary range that the employer “reasonably” expects to pay.

Penalties for failure to comply range from $100 to $10,000 per violation, and the law notes that if you don’t have the records, rebuttable presumption lies in favor of the claim. So Duffy recommends screenshots of postings, and thorough record-keeping for all business owners.

Questions About Human Capital Management? PayrollCentric Can Help.

Laws around pay equity and reporting are constantly changing. If you have questions, we’re here to help. Call us at 310-258-9703 or contact us online.