New Guidance On California’s Pay Transparency Law – Employee Benefits & Compensation

19 January 2023

Morrison & Foerster LLP

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With California’s new pay transparency and pay reporting
obligations underneath S.B. 1162 now in impact, employers are looking for
solutions on numerous open questions for complying with the brand new regulation.
As we beforehand reported, S.B. 1162 requires
employers with 15 or extra staff to incorporate pay scale
info in every job posting for positions in California, as
nicely as disclose info to present California staff upon
request. Failure to adjust to these necessities may end up in
important civil penalties (starting from $100 to $10,000 per
violation) and doable authorities investigations or non-public

Although we’re nonetheless ready for extra formal steerage,
California Department of Industrial Relations (DIR) not too long ago
launched new Frequently Asked Questions (FAQs) that present
some key interpretations of S.B. 1162.

Extraterritorial Application: One of the most important
open questions for S.B. 1162 was tips on how to rely staff to
decide protection. The FAQs state that the pay transparency
necessities underneath S.B. 1162 will cowl any employer that has at
least 15 staff anyplace (even outdoors California) and a minimum of
a type of staff is in California.

Applies to Remote Jobs: The FAQs make clear that
the brand new regulation applies to any job that may be carried out by somebody
based mostly in California, both working in individual or remotely. This
implies that the Labor Commissioner believes the pay scale disclosure
necessities apply to any distant positions the place the employer might
probably rent somebody situated in California.

Pay Scale Cannot Be Linked to Job Postings:
The FAQs state that pay scale info have to be included instantly
throughout the job posting and can’t be linked in an digital
posting. Covered employers additionally can not use a QR code in a paper
posting that can take the applicant to the wage info.
This interpretation is a departure from another state pay
transparency legal guidelines, comparable to Colorado, that allow employers to
embrace hyperlinks or QR codes in job postings to pay vary

Pay Scale Does Not Include Bonuses, Tips, or Other
Benefits: The FAQs additionally make clear that “pay scale”
means the wage or hourly wage vary the employer moderately
expects to pay for a place and doesn’t embrace bonuses, suggestions,
or different advantages. If employers pay on a fee or piece price,
nevertheless, employers should embrace the piece price or fee ranges
they moderately count on to pay for the place within the job posting.
The Labor Commissioner famous that employers are free to incorporate
different types of compensation to make its recruitment efforts extra
aggressive however cautioned that such compensation would nonetheless be
thought of for equal pay functions.

Retaliation Remedies: S.B. 1162 requires that
people should file a written grievance with the Labor
Commissioner inside one 12 months of the date the person discovered a
violation occurred. The FAQs state that staff may file a
declare for retaliation with the Labor Commissioner or by submitting a
civil grievance in court docket inside one 12 months of retaliation. The FAQs
additional offers {that a} prevailing plaintiff may be awarded
reinstatement, again pay, curiosity, and different cures. The Labor
Commissioner may also impose civil penalties starting from $100 to
10,000 per violation.

What Does This Mean for Employers?

California’s pay transparency necessities are far-reaching
and carry some important cures and penalties. Employers ought to
overview their present compensation and job posting insurance policies and
processes to make sure they’re compliant with S.B. 1162. Multistate
employers or employers who recruit for distant roles must also
think about their methods for compliance in gentle of the rising
patchwork of pay transparency legal guidelines in different states and localities,
together with Colorado, New York State and New York City, and
Washington. These legal guidelines impose related necessities (together with
posting pay scales for distant roles that could possibly be carried out inside
these jurisdictions), but in addition have key variations that require
employers to contemplate having a cohesive technique for

Because of the generality of this replace, the data
offered herein might not be relevant in all conditions and may
not be acted upon with out particular authorized recommendation based mostly on specific

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