SB 1162 Summary

California’s SB 1162, signed by Governor Newsom requires employers – starting January 1, 2023 – to disclose pay scales to current employees and on job postings, and to report even more pay data to the California Civil Rights Department, including median and mean hourly rates.

Why is This Necessary?

Without pay transparency, job seekers are unable to determine a benchmark from job postings for what they can expect to be paid.

Two primary goals of SB 1162 are to a) advance pay equity and B) combat gender-based discrimination. Workforce studies have revealed patterns of wage disparity based on numerous factors such as sex, race, and ethnicity.

This bill also mandates that the median and mean hourly rates for each combination of race, ethnicity, and sex within each job category be included in pay data reports. Additionally, because all employers must give their employee’s who ask their payscale for their job, the disclosure of pay scale information might uncover certain pay equity or transparency concerns.

What Are the Numbers?

Reporting

Private employers with 100+ employees who are hired through labor contractors must complete a separate pay data report, including pay data by sex and ethnicity, for their contracted employees.

“Labor contractor” is defined as “an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.”

Posting

Employers with 15 or more employees must affirmatively include the pay scale for a position in any job posting.

Recordkeeping

Employers have to keep records of the job title(s) and wage rate history for each employee for the duration of employment, plus 3 years after termination.

More Details

Here are some other highlights:

• If an employer utilizes a third-party vendor to upload job listings, the vendor must include the pay scale in its posting after receiving information from the employer about the pay scale.
• Private employers with 100+ employees who are hired through contractors must complete a separate pay data report, including pay data by sex and ethnicity, for their contracted employees as well.
• Any and all of these documents may be inspected by the California Labor Commissioner.
• The law allows for individual causes of action to be filed within a year of the aggrieved party learning of the alleged breach of the legislation. Remedy options include injunctive relief and any other relief the court deems necessary.

Are there any penalties?

Civil fines for noncompliance, per infraction, may be imposed by the Labor Commissioner and range from $100 to $10,000. The statute offers a “safe harbor” for first-time offenders who violate the pay disclosure requirement if the business can show that all job advertising for vacant positions have been amended to contain the necessary pay scale.

The data keeping obligation must be followed; otherwise, there will be a rebuttable presumption in favor of any employee who files a legal claim.

How does this affect the contingent workforce?

There are many unknowns due to lack of clarity in the law’s scope of terms and intent (e.g., pay scale, violation, statute of limitations for violations) and the lack of case law.

As an example: It is yet unknown if the new law would apply to companies that are based outside of California but have employees there, including those who are location independent (aka, remote), or to companies that advertise available positions that can be filled remotely, including from California.

For those who manage a location independent or gig workforce program, here are some action items to prepare for both the current legislation and any future legislation from other states:

• To analyze and correct any variances, all businesses conducting business in California should get legal advice regarding their most recent records and payment data.
• For the purpose of determining the wage range that should be fairly set for a candidate or employee in those circumstances, review all current job descriptions, job ads, promotion opportunities, and potential transfers. As part of this procedure, take into account the wage range for those who are currently in such roles.
• Together with legal counsel, conduct a privileged pay equity audit and make any necessary revisions before the deadline of January 1, 2023.
• In the course of talks, review any applicable collective bargaining agreements or proposals.

Contact C.Solutions for assistance with managing your location independent workforce.