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Sit Up, Set Up, Get Ready: The New Laws for Pay Transparency in California

Jeannine Kaiser and Donna Hamlin, 2GO Advisory Group

January is here and the new labor law enactment begins whether we are ready or not. One of the biggest impact labor laws for 2023 is Senate Bill 1162, signed by California Governor Gavin Newsom. Whether your company is based in California or not, this potentially impacts your company. California is not the first jurisdiction to enact pay transparency laws, but California is a trendsetter when it comes to labor law. Based on past changes, this transparency will likely roll out nationwide in short order.

Often, smaller or startup companies have NOT relied on a set pay scale to determine wages, instead paying based on market demands at given times. With SB1162, companies now need a structured way to determine wages. Starting on January 1, 2023, if employees request the pay scale for their given positions, the employer must provide it. The civil penalties for employers failing to do so range from $100 to as high as $10,000.

What is this law and what is the impact on your company’s employment and hiring practices?

Here are the facts about SB1162:

  • SB1162 applies to California companies with fifteen (15) or more employees.
  • Employers must post the salary or hourly wage scale for any position posted internally or externally.
  • Posting salary includes the use of third-party posting boards such as LinkedIn, Monster, and Indeed.
  • The law does not delineate how a national job posting would be handled if the person hired was a resident of California.
  • For companies with 100 or more employees, additional reporting requirements are expanded to include pay data including race, sex, and ethnicity information for all contract employees hired through labor contractors.
  • You must maintain records of salaries for all employees after separation for no less than three (3) years. This data must include title and salary history. These records must be made available to the State for inspection.

If you haven’t already done so, here are the steps should you take now:

We suggest you conduct a privilege pay audit of your workforce. For example, long-tenured employees may have received only minor cost of living increases and have disproportionate earnings compared to more recently hired employees in the same role. If so, this new law will make this glaringly apparent. Adjustments will need to be made to avoid the of risk losing experienced talent.

  • Determine the pay scales for the positions of employees currently working at your company.
  • Make pay adjustments for any pay discrepancies with current employees, as needed.
  • Update all job postings to include pay scales for both internal and external positions, including third-party posting boards and websites.
  • Review and update record maintenance systems, policies, and procedures to comply with the new law.
  • If you have a multi-state operation, you might consider developing a strategy to address all of these at the same time. It is just a matter of time before other states and jurisdictions follow suit.

Our knowledgable team can conduct this audit and is here to help you navigate the changes in employment law and the everyday challenges of supporting your company’s HR needs. We are here to navigate and create a successful workforce, as the foundation of every company’s success.

 

Biznology Editorial Team

Biznology is a digital magazine and learning platform that focuses on the intersection of business and technology to help business leaders make smarter decisions for today, tomorrow – and prepare them for what’s next. Biznology covers a range of topics that are top of mind for 21st century leaders dedicated to improving, changing and ultimately transforming their organizations for the future.

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