In late December 2022, the California Labor Commissioner’s office released guidance in the form of Frequently Asked Questions (“FAQs”) on the state’s new pay scale disclosure requirements under the Equal Pay Act, which went into effect on January 1, 2023.
The FAQs identify which employers will be subject to the pay disclosure requirements and the content of the mandatory disclosures.
Under Labor Code 432.3, “an employer with 15 or more employees must include the pay scale for a position in any job posting.” According to the FAQs, the Labor Commissioner will count employees using the same methodology applied for Supplemental Paid Sick Leave using the definition from Labor Code 1182.12. Therefore, the disclosure requirements apply if an employer has at least one employee located in California, so long as it employs “directly or indirectly, or through an agent or any other person” 15 or more people.
The FAQs also indicate if a position can be filled in California, either remotely or in person, then the pay scale must be included in the job posting.
A pay scale is limited to the “salary or hourly wage range the employer reasonably expects to pay for a position.” A set hourly rate or set piece rate may be included in place of a pay scale if an employer “intends to pay a set hourly amount or a set piece rate amount, and not a pay range.”
Bonuses, tips, and other benefits are not required to be included in the pay scale. Employers may voluntarily provide information on “compensation or tangible benefits provided in addition to a salary or hourly wage.” However, according to the Labor Commissioner, “other forms of compensation may be considered for equal pay purposes.”
Where wages are based on a piece rate or commission, the employer must include the piece rate or commission range the employer reasonably expects to pay for the position.
The Labor Commissioner’s guidance clarifies that employers cannot link to the salary range in an electronic posting or include a QR code in a paper posting. The pay scale must be included on the posting itself.
The Equal Pay Act also requires that employers keep records of a job title and wage rate history for each employee for the duration of the employment plus three years after the end of the employment. These records are open to inspection by the Labor Commissioner, which will then use to determine whether there is a pattern of wage discrepancy.
All job postings posted on or after January 1, 2023, must contain the required pay scale information. Employers must carefully review job postings before they are published. Failure to comply may subject the employer to penalties ranging from $100 to no more than $10,000 per violation.
The best approach is to vet your job listings with your business or employment attorney before they are published to assure compliance and to obtain answers to any related pay transparency questions you, as an employer, may have.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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