On September 27, 2022, Governor Newsom signed SB 1162. The new law, which became effective January 1, 2023, has broad new requirements for all California employers regarding the tracking and retention of employee pay information. Additional, more onerous requirements are detailed for employers depending on their number of employees, as outlined below.
Requirements for All California Employers:
- Employers must provide the pay scale for a prospective job or a current job if requested by any job applicant or current employee.
- Employers must maintain job title and wage rate history for each employee during and for three years after employment ends.
Requirements for California Employers Depending on Number of Employees:
- Employers with fifteen (15) or more employees must include a pay scale within any job posting. Notably, employers that utilize recruiters or third parties to place job postings are not relieved of this requirement and must ensure a pay scale is provided to these third parties to include in any job posting.
- Employers with one hundred (100) or more employees, with at least one employee working in California, must submit annual pay data reports (identifying the mean and median pay data for combinations of gender and race / ethnicity) to the California Civil Rights Department (formerly known as the Department of Fair Employment and Housing) beginning in May 2023. This means that employers from any U.S. state must file a report if they have at least 100 employees and one or more work in California.
The new law provides little detail about what may meet the requirements for providing a “pay scale” apart from general guidance that it must be “the salary or hourly wage range that the employer reasonably expects to pay for the position.” We will continue to monitor developments in this law as agencies and courts begin addressing the nuances of interpretation and enforcement.
If an employee believes an employer has violated these or other requirements of the law, they may file a complaint with the Labor Commissioner, for which civil penalties between $100 and $10,000, per violation, may be recoverable. These penalties could of course be a significant burden to any employer at the high end of the range, and a finding of a single employee violation could trigger the Labor Commissioner to investigate an employer for additional violations.
In addition, employers may face litigation and exponentially higher penalties for violations applicable to groups of employees under the California Private Attorney General Act (“PAGA”).
Consequently, awareness of and compliance with SB 1162’s new requirements are critical for all California employers.
We here at Scherer Smith & Kenny LLP remain available to address any questions you may have related to these or other employment- or business-related issues. For additional information, please contact Denis Kenny at [email protected], Ryan Stahl at [email protected], or John Lough, Jr., at [email protected]
-Written by Ryan Stahl