Pay Transparency Becomes More Transparent: Labor Commissioner Issues Answers to Frequently Asked Questions
On the first of the year, California’s new pay transparency law requiring pay scales in job postings took effect. Although the new legislation was passed in the fall, some requirements of the new law left more room for interpretation than many employers would have wanted.
To summarize, Senate Bill 1162 instituted significant changes to pay data reporting and requires employers with 15 or more employees to post a pay scale in any open job posting. Recently, the Labor Commissioner’s Office updated its Frequently Asked Questions on a few key elements of this law which will begin to answer some of the previously unanswered questions posed by employers:
15-Employee Threshold. The job posting requirement of the new law applies to employers with 15 or more employees. However, the statute does not specify how to count the employees for purposes of coverage. The Labor Commissioner’s guidance clarifies that the calculation of the 15-employee threshold applies when an employer reaches 15 employees (regardless of location) at any point in a pay period, and at least one employee is currently located in California. Thus, all employees are counted regardless of how many facilities an employer has or whether they are employed inside or outside of California.
Remote Positions. The law is silent as to whether it applies to nationwide job postings that are not required to but could be filled by someone in California. The Labor Commissioner has clarified that the pay scale must be included in the job posting if the position may ever be filled in California, either in-person or remotely. For those multistate or fully remote employers, this will likely change their approach to comply with this new requirement.
Pay Scale Definition. The legislation defines “pay scale” as the salary or hourly wage range that the employer reasonably expects to pay for the position. The FAQs clarify that pay scale does not include bonuses, commissions, tips, or other benefits. However, if the position’s hourly or salary wage is based on a piece rate or commission, then the piece rate or commission range the employer reasonably expects to pay for the position must be included in the job posting. Additionally, when disclosing pay scales, an employer must include the pay scale in the job posting itself. No substitutes are acceptable including links to the pay scale or QR codes.
While some questions remain unanswered, for instance what the limits of a reasonable pay scale are. Many of them are either answered by these updated FAQs or my looking closely at each employer’s past hiring practices and salary information. Stradling attorneys are well versed to assist employers in these matters and are ready to assist when and where needed. Don’t hesitate to reach out if you have questions or assistance complying with these new requirements.
