California Labor Agency Posts FAQs Relating to New Pay Scale Posting Requirements | Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Employers posting jobs to fill in California must now include a salary range in the posting under new requirements that took effect in early 2023. Senate Bill (SB) 1162, which was signed by Governor Gavin Newsom in September 2022, seeks to address racial and gender pay disparities by requiring employers to post salary ranges in job postings and by expanding employers’ salary data reporting obligations with the California Department of Civil Rights (CRD ). In December 2022, the California Department of Industrial Relations (DIR) issued updated guidance for employers regarding compliance with new wage transparency obligations. Below is a summary of the wage transparency requirements now found in California Labor Code section 432.3.

Payment transparency

As of January 1, 2023, employers with fifteen or more employees must include a pay scale in a job posting. If the employer uses a third-party recruiter, the employer must provide the recruiter with the salary scale for the position sought, and the recruiter must include this in each job posting.

SB 1162 did not specify how an employer counts fifteen or more employees. The California Labor Commissioner, who is charged with enforcing the wage scale requirements, has interpreted this requirement to mean that the employer has at least 15 employees located anywhere, provided that at least one of them is currently in California.

The law also does not specify which posted positions are subject to California law. The California Labor Commissioner has interpreted this requirement to mean that the salary scale must be included in a job posting for any job that can be filled by a California resident, even if remotely.

Employers subject to salary scale posting requirements in other states have considered complying with California’s requirement by providing a link to salary information in an electronic job posting or by providing a quick response (QR) code in a post letter that directs the reader to pay information. The California labor commissioner has expressed the opinion that such bonds will not suffice in California. Instead, the specific pay scale should be included within the actual job posting, according to the DIR.

Rate of payment

Section 432.3 defines “rate of pay” to mean the hourly wage or wage range that the employer “reasonably expects to pay for a position.” What if the employer only pays a fixed fee for the role (eg minimum wage)? According to the DIR, an employer that “intends to pay a specified hourly amount or a specified position amount” for the position instead of a pay range may comply with the requirement by providing the dollar amount of “that hourly rate of certain or certain percentage of pieces.”

The agency states that some form of compensation should be posted in addition to the salary or hourly rate. California Labor Code Section 200 allows employers to pay employees on a task, piece, or commission basis, and if the hourly wage or salary is based on such forms of payment, then the job posting must include the “piece rate or range of the employer’s commission reasonably expects to pay,” according to the DIR. The agency’s FAQ on the subject is vague; it does not explain what it means to “base” an “hourly or wage range” on a rate or commission.

Any compensation or tangible benefits provided other than salary or hourly wages are not required to be posted. Employers are not required to include “bonuses, tips or other benefits” as part of the pay scale, although employers may include this information as part of their recruiting efforts.

Fines

Under the law, a person who claims to be “injured” by an employer’s failure to enforce wage scale requirements may file a written complaint with the labor commissioner within one year of learning of the violation. The labor commissioner must investigate the allegations, and if he finds a violation, the labor commissioner may impose civil penalties of not less than $100 and up to $10,000 per violation. For a first-time violation, employers may not be assessed a penalty if the employer demonstrates that “all job postings for open positions have been updated to include the pay scale as required by this section.”

Additionally, under the Act, a person who claims to have been harmed by a claim violation may also file a civil action seeking an injunction or any other relief that a court “deems appropriate.”

Main Agreement

California joined a growing list of states and jurisdictions that are seeking to address pay equity through pay transparency laws, placing additional compliance burdens on employers. Specifically, California’s SB 1162 requires covered employers to include the wage rate they expect to pay for a position within a posting advertisement to fill that position. Employers may wish to review their hiring practices and agreements with third-party recruiters to ensure compliance with the new salary grade posting requirements. Our recent article “California’s New Wage Transparency Law: Changes to the 2023 Wage Data Reporting Obligation” has more details on the wage data reporting requirements.