Updates in California Employment Law: Additional Requirements for Pay Data Reporting and Pay Transparency

On September 27, 2022, Governor Gavin Newsom signed into law Senate Bill 1162 (“SB 1162”), expanding California’s data reporting requirements under Government Code Section 12999 and pay transparency law under Labor Code Section 432.3. Effective January 1, 2023, California employers will have to provide detailed pay data to the California Civil Rights Department and pay scale information to applicants and employees upon request or face civil penalties. Significant updates are summarized below.

California Government Code Section 12999:

Existing law requires private employers with 100 or more employees to submit a pay data report to the department, including the number of employees by race, ethnicity, and sex in specified job categories, or alternatively, an Employment Information Report (“EEO-1”), on or before March 31 of every year. Some key changes to Government Code Section 12999 imposed by SB 1162 include:

Submission of a more detailed pay data report including the mean and median hourly rate for each combination of race, ethnicity, and sex, within each job category. Submission of an EEO- 1 in lieu of a pay data report is no longer sufficient.

Private employers with 100 or more employees hired through labor contractors are also required to submit a detailed pay data report as described above and must therein disclose the ownership names of all labor contractors used to supply employees.

Employers with multiple establishments must submit pay data reports covering each establishment. A consolidated report is no longer required.

Failure to file the requisite report subjects employers to civil penalties of up to $100 per employee and up to $200 per employee for any subsequent failure to file.

Employers must file their pay data reports on or before the second Wednesday of May of every year.

California Labor Code Section 432.3:

Existing law requires an employer to provide applicants with the pay scale for a position (salary or hourly wage range) upon reasonable request. Some key changes to Labor Code Section 432.3 imposed by SB 1162 include:

In addition to providing applicants with pay scale information upon reasonable request, employers must also provide current employees with the pay scale information for their position(s) upon request.

Employers with 15 or more employees are required to publish the pay scale in any job posting.

Employers are required to maintain records of job title and wage rate history for each employee for the duration of the employment plus three years. Such records shall be open to inspection by the Labor Commissioner.

Violation of the statute exposes employers to civil penalties ranging from $100 to $10,000 per violation.

Failure of an employer to keep the requisite records creates a rebuttable presumption in favor of any aggrieved employee who files a written complaint with the Labor Commissioner within one year after the date the person learned of the violation.

Moving Forward:

Employers should prepare to comply with the abovementioned changes, as SB 1162 goes into effect on January 1, 2023. BHGR understands the difficulty of navigating California’s ever-changing, complicated employment laws and is prepared to help our clients prepare for compliance. Please don’t hesitate to contact our employment law team with any questions.

Authors: Azar Khazian and Eleanore Hoffmeyer

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