California Provides Some (But Not Much) Guidance on New Pay Scale Disclosure Requirement: 6 Key Takeaways for Employers
California officials recently updated their Equal Pay Act FAQs to answer a number of questions about the state’s new salary transparency requirement for job postings – which goes into effect on 1 January. But California employers who expected their stockings to be filled with clarification and detailed guidance from the state may instead be left feeling like they’ve been raking in a lump of coal. While the December 27 update from the California Division of Labor Standards (DLSE) provides some needed clarification regarding SB 1162, it leaves many questions unanswered and lacks more detailed and comprehensive guidance issued by states such as Washington and Colorado regarding their job posting requirements. . Here are six top guidelines for employers as they prepare to comply with California’s new law.
1. How to determine the number and coverage of employees
SB 1162 requires employers with “15 or more employees” to include the pay scale for a position in each job posting. The updated FAQs clarify (as expected) that the DLSE interprets this to apply to employers who have 15 or more employees nationwidewith at least one employee located in California.
But how do you determine if someone is an employee? And how do you measure the threshold if you have a fluctuating workforce? For questions like these, the FAQ directs employers to advance guidance on minimum wage and paid sick leave. In addition, the DLSE noted that the requirements of the new law will be interpreted in accordance with those previous interpretations for counting employees.
2. Telecommuting from California is covered
According to the updated FAQ, DLSE interprets SB 1162 to mean that the pay scale must be included in the job posting “if the position can ever be filled in California, in person or remotely.” Therefore, if you are a covered employer, you may want to comply with the job posting requirements if the job is located or physically IN California or can be done remotely from California.
3. You can post a specific rate if you don’t have a range
Many employers have questioned how to comply with SB 1162 if they do not have an hourly or wage range for a position, but a set hourly or wage rate. The updated FAQ clarifies that an employer who intends to pay a certain hourly amount or a certain fee amount (rather than a pay range) can only provide that amount in the job posting.
4. Only the basic payment should be posted
The updated FAQ clarifies that the employer is only required to provide the wage or hour range, but not necessarily any tangible compensation or benefit other than the wage or hourly wage (such as bonuses, tips or other benefits). DLSE notes that employers may include this information voluntarily to make recruiting efforts more competitive and reminds employers that other forms of compensation may be relevant and considered for equal pay purposes.
5. Merely linking to a pay scale will not suffice
The updated FAQs specify that employers Can not simply link to the pay scale in an email or include a QR code in a paper post that will take an applicant to the pay scale information. Instead, DLSE states that the rate of pay will be included within the posting itself.
6. This is where the confusion comes in when it comes to commissions
The guidance on how to handle commissions is vague and leaves a lot to be desired. For example, in FAQ 33, the DLSE states, “If the hourly wage or position wage 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 work. posting.”
This language is a bit ambiguous, as commissions are more often paid as “additional compensation” on top of the salary or hourly wage rather than forming the “base” for the hourly wage or salary. Based on the previous FAQ regarding base salary (discussed above), it appears that “additional compensation” may be included – but is not required to be included – in the job posting. But this FAQ and the reference to hourly wages or wages that are “based on a piece rate or commission” is unclear.
For this reason, employers should consult with counsel to navigate how to approach the commissions when attempting to comply with job posting requirements.
Is further clarification forthcoming?
The updated FAQ is a bit thin and doesn’t answer all the questions employers have about the new job posting request. In some cases, they even raise more questions than answers. DLSE could potentially update or release additional FAQs in the coming days or weeks, but there is no set schedule or guarantee that they will.
Therefore, employers should continue to work closely with attorneys to comply with the requirements of SB 1162.
We will continue to monitor developments regarding this new law and its effect on California employers. Make sure you’re subscribed to Fisher Phillips’ Insight System to get the most up-to-date information. For further assistance on how to prepare for compliance with these new requirements, contact your Fisher Phillips attorney, the author of this Insight, any attorney in one of our six California offices, or any attorney in our Payroll Equity Practice Group .