California Labor Commissioner Releases Limited Guidance on Pay Transparency Law

California Labor Commissioner Releases Limited Guidance on Pay Transparency Law

On January 1, 2023, California’s new wage transparency law requiring the wage scale of job openings will go into effect. Although Senate Bill 1162 passed in September, many employers were left wondering how the California Labor Commissioner would interpret several key elements of the law. As previously discussed, Senate Bill 1162 made major changes to the Annual Wage Data Report and requires employers with 15 or more employees to post a pay scale in every open job posting. Although the Department of Civil Rights has not yet issued guidance on the new annual wage data requirements, the Office of the Labor Commissioner has updated its Frequently Asked Questions on several key elements of this law, discussed below:

15-The threshold of the employee. Section 432.3 of the newly revised Labor Code applies to employers with 15 or more employees. The statute does not specify how to count employees for coverage purposes, but the Labor Commissioner has issued guidance stating that the calculation of the 15-employee threshold must be consistent with how an employer counts employees for 2022 COVID-19 purposes. Paid Sick Leave (SPSL) and phase-in of new minimum wage rates. For purposes of calculating whether the new 2023 minimum wage applies,1 an employer is covered if it has 26 or more employees. Guidance issued on the subject reads: “The Labor Commissioner recommends that if an employer reaches the threshold of 26 employees at any point in a pay period, they compensate their workers at the highest minimum wage rate for the duration of their the entire salary period and continuation. forward as long as they have a minimum of 26 employees.”

By reference in its preliminary guidance on SPSL and the minimum wage, the Labor Commissioner interprets the 15-employee threshold to apply when: 1) an employer reaches 15 employees at any point in a pay period and 2) at least one employee is currently in California. If an employer has more than one facility, all employees, as well as overseas employees, are counted for purposes of making this calculation.

Remote worker. Previously, employers were unsure whether this law would affect job postings across the country if it were opened can be completed by someone in California. The Labor Commissioner has clarified that the salary scale must be included in the job advertisement if the position can ever be completed in California, either in person or remotely. For those multi-state or fully remote employers, this may change their approach to complying with California’s wage transparency law.

Definition of pay scale. Rate of payment is defined as the wage or hourly wage range that the employer reasonably expects to pay for the position. The Labor Commissioner clarified that the salary scale does not include bonuses, commissions, tips or other benefits. However, if the position’s hourly wage or salary is based on a piece rate or commission, then the piece rate or commission range that the employer reasonably expects to pay for the position must be included in the job posting.

When disclosing pay scales, an employer must include the pay scale in the job posting itself. No links to salary scales are allowed, nor are QR codes allowed as a substitute for placing salary information in the actual post.

Clarification of legal remedies. Remember that a person has one year to file a written complaint with the Labor Commissioner from the date he learned of the violation (not when the violation may have occurred.) Under the Labor Commissioner’s guidance, an employee may also file a claim ABOUT revenge with the Labor Commissioner within one year of any retaliation.

Alternatively, an employee may file a civil retaliation claim in court within one year of the retaliation. Under the Labor Code, an employee who prevails in a retaliation claim may be awarded reinstatement, back pay, interest on back wages, and possibly other remedies. An employee does not have to file a retaliation claim with the Labor Commissioner before filing a lawsuit in court. This is in addition to the civil penalties that the Labor Commissioner is allowed to assess for violations of this law ($100-$10,000).

The Labor Commissioner’s guidance is here: California Equal Pay Law

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