California Pay Data Reporting
Over the years, there has been a rise in new regulations to promote more inclusive and fair workplaces. This can come in the form of annual workforce demographic reporting, anti-discrimination laws, and most recently, new pay transparency legislation.
As of June 2023, eight U.S. states—California, Colorado, Connecticut, Maryland, New York, Nevada, Rhode Island, and Washington—have passed laws requiring employers to disclose salary information to job applicants and employees.
An additional 16 states and Washington, DC considered similar pay transparency bills this year. If enacted, these new laws would cover nearly 39 million more workers. Combined with existing laws, pay transparency legislation would protect nearly half of U.S. workers.
For U.S. employers, this trend means heightened scrutiny on compensation disclosure and reporting practices.
In this article, we’ll focus on requirements for employers in California.
California Pay Transparency Overview
In January 2023, California introduced a broadened range of requirements with Senate Bill (SB) 1162.
For human resources and talent professionals hiring or employing individuals in California, this means a number of new compliance specifications to carefully navigate.
Broadly, the requirements of SB 1162 can be broken down into several components: pay range disclosure for applicants and existing employees, annual pay data reporting for employees and/or contracted laborers.
In this article, we detail the new requirements and FAQs to help HR and talent leaders stay compliant with the new law.
Pay Scale Disclosures
- Employers with 15 or more employees must disclose the pay scale (salary or hourly wage range) for a position in any job posting.
- Employers must provide the pay scale to current employees upon request.
What is the 15 employee threshold?
According to the California Labor Commissioner’s expanded guidance, the 15-or-more threshold applies so long as at least 1 of those 15 employees is in California; the job posting must have a pay range disclosed “if the position may ever be filled in California, either in-person or remotely.”
What counts as pay scale disclosure?
According to the California Labor Commissioner’s Office, a pay scale refers to the salary or hourly wage range that an employer reasonably expects to pay for a position. It does not include any additional compensation such as bonuses, commissions, tips or benefits. For jobs that pay by piece rate or commission, the expected piece rate or commission range must be included in the pay scale.
Notably, employers are required to disclose the pay scale for a position within the actual job posting itself. No links, QR codes or other substitutes are permitted.
Annual Pay Data Reporting
Employers with 100 or more employees must report to the state the median and mean hourly pay rate for each job category by gender, race, and ethnicity.
Critically, California requires employers to report data that will allow for comparison of pay between different, intersectional groups: “[w]ithin each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate.”
This reporting requirement applies regardless of whether an employer files an annual EEO-1 report; importantly, EEO-1 reports will not be sufficient in satisfying California’s state pay reporting requirement.
Employers can access the California Pay Data Reporting Portal to submit their reports, and to access templates and resources; the deadline is May of each year, beginning in 2023.
What is the 100 employee threshold?
Employees located inside and outside of California are counted when determining whether an employer has 100 or more employees.
Contractor reporting requirements
Similarly, employers with 100 or more employees employed through labor contractors in the prior calendar year must also submit a separate pay data report.
The law defines a “labor contractor” as any individual or company that provides workers to perform services for a client company’s normal business activities.
Labor contractors are obligated to give employers all of the necessary pay information to allow employers to submit complete and accurate reports to the California Retirement Director (CRD).
Key Takeaways
All in all, California’s SB 1162 significantly expands pay data reporting rules. This means that for employers hiring in or employing individuals from California, the compliance burden has increased.
With more states on track to enact laws soon, having a strong pay transparency plan is increasingly urgent for employers around the country.
About Arbor
Arbor enables leaders to easily capture, analyze, and benchmark DEI and workforce outcomes. Arbor’s data analytics platform enables organizations to stay compliant with a range of regulatory reporting requirements, including California’s SB 1162.
Contact us at hello@findarbor.com to learn more about how our platform can help your organization easily stay on top of regulatory requirements.
