The California Equal Pay Act has, for many years, prohibited employers from paying its employees less than employees of the opposite sex for equal work.  Then in 2015 the California Fair Pay Act modified the Equal Pay Act – most significantly by changing the language that equal pay is required for employees who perform “substantially similar work.”

In 2018, California again addressed the issue of pay equity with Labor Code section 432.3 which prohibits an employer from, either orally or in writing, personally or through an agent, asking for any information concerning an applicant’s salary history, including wages, other forms of compensation and benefits. An employer is also prohibited from relying on an applicant’s salary history as a factor in determining whether to offer employment at all or in determining what salary to offer. In addition, upon reasonable request, an employer is required to provide the pay scale for a position to an applicant applying for employment.

Employers with 100 or more employees:

For years, many employers with 100 or more employees have been obligated to annually report to the EEOC on the EEO-1 form data about the representation of men and women of different ethnic groups in nine distinct occupational classifications or job categories.

Then, in 2021 California private employers with 100 or more employees were required to report pay data to the Department of Fair Employment and Housing (now the Civil Rights Department or CRD) by March 31, 2021, and by March 31 each year thereafter, for specified job categories by gender, race, and ethnicity. (SB 973)

Recently signed legislation (SB 1162) now requires a private employer with 100 or more employees to submit a pay data report on or before the second Wednesday of May 2023, and for each year thereafter on or before the second Wednesday of May. The report, covering the prior “Reporting Year”, must include the median and mean hourly rate for each combination of race, ethnicity, and sex within each of the following 10 job categories:

  • Executive or senior level officials and managers
  • First or mid-level officials and managers
  • Professionals
  • Technicians
  • Sales workers
  • Administrative support workers
  • Craft workers
  • Operatives
  • Laborers and helpers
  • Service workers

This bill also requires a private employer with 100 or more employees hired through labor contractors, as defined, to also submit a separate pay data report to the CRD for those employees. A labor contractor must supply all necessary pay data to the employer for the report, and the employer must also disclose in the pay data report the ownership of all labor contractors used to supply employees.

Further, not only can applicants request the pay scale for the position that they are applying for, but employers are also required, upon request, to provide to an employee the pay scale for the position in which the employee is currently employed.

A “pay scale” is defined as the salary or hourly wage range that the employer “reasonably expects” to pay for the position.

Employers with 15 or more employees:
For employers with 15 or more employees the bill requires the employer include the pay scale for a position in any job posting.  If the employer uses a third party to announce, post, publish, or otherwise make known a job posting, the employer must provide the pay scale to the third party and would require the third party to include the pay scale in the job posting.
Records Inspection & Enforcement

Employers are required to maintain records of job titles and wage rate history for each employee for the duration of their employment plus 3 years. These records must be open to inspection by the Labor Commissioner; the Labor Commissioner has the authority to investigate complaints alleging violations of these requirements and can impose civil penalties not to exceed one hundred dollars ($100) per employee upon any employer who fails to file the required report and not to exceed two hundred dollars ($200) per employee upon any employer for a subsequent failure to file the required report.

If the employer is not able to submit a complete and accurate report because a labor contractor has not provided it the required pay data, the Court can apportion the penalty amount to any labor contractor that has failed to provide the required pay data.

An employee or applicant can file a written complaint with the Labor Commissioner within one year after the date they learned of the violation. An employee or applicant may also file a civil action for injunctive relief or any other relief that a court deems appropriate.

If an employer fails to keep records in violation of SB 1162, there will a rebuttable presumption in favor of the employee’s claim.

Notably, Senate Bill 1162 does not limit the definition of employers to those located or employing workers in California so employers with remote workers outside of California will also need to gather and submit the required information.

This Newsletter is intended as a brief summary of employment law. While every effort has been made to ensure the accuracy of the information contained herein, it is not intended to serve as “legal advice,” or to establish an attorney-client relationship. If additional information is needed on any of the topics contained herein, please contact our office. All rights reserved. ©2022.

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