As we previously reported here last fall, California enacted a pay transparency law (SB 1162) requiring employers with 15 or more employees to disclose pay scales in job postings beginning January 1, 2023. The Labor Commissioner recently issued guidance in the form of FAQs to address some of the unanswered questions regarding the interpretation and enforcement of the California Equal Pay Act.
The law expands pay data reporting requirements for California employers with 100 or more employees, and requires employers with 15 or more employees to include the “pay scale” for a position in any job posting. However, the law is silent on some key issues, such as: (1) how to determine the 15 employee threshold for coverage; (2) how to calculate the “pay scale;” and (3) whether positions that are not required to be filled by a California employee are covered (i.e., remote positions that may, or may not, be performed outside of California). The FAQs provide helpful guidance to address these questions.
The Labor Commissioner’s FAQs clarify the following:
- Determining 15 Employee Limit: The Labor Commissioner’s guidance explains which individuals must be counted to determine whether an employer is covered under the law and, therefore, must disclose pay scales in job postings. Specifically, the law applies when (1) an employer reaches 15 employees at any point in a pay period, and (2) one employee is currently located in California. When calculating the 15-employee minimum threshold, “bona fide” independent contractors are excluded, while exempt employees, part-time workers, minors, and new hires are included.
- Defining Pay Scale: The law defines “pay scale” as the salary or hourly wage range that the employer reasonably expects to pay for the position. The FAQs clarify that “pay scale” excludes bonuses, commissions, tips, or other benefits. However, if a position’s salary or hourly wage is based in whole or in part on either commission or a piece rate, then the commission range or piece rate the employer reasonably expects to pay for the position must also be included in the job posting.
- Posting Requirements: The guidance provides additional clarification regarding when and how the new “pay scale” information is required to be disclosed. The FAQs explain that the “pay scale” must be included within a job posting if the position “may ever be filled in California,” either in-person or remotely. The wage info must be displayed in the job posting itself, and cannot be included via a link or QR code.
In light of the Labor Commissioner’s FAQs, California employers should thoroughly review their job postings to ensure compliance with the new pay transparency law and the Labor Commissioner’s guidance, and should consult with counsel prior to revising or posting new job positions in 2023.