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Pay transparency in California

Tech salaries are about to get a lot more transparent. On Tuesday, Gov. Gavin Newsom signed a new law to require California employers to post salary ranges in job postings and report hourly pay data by employees’ race and sex to the state. We spoke with four employment lawyers and other pay transparency experts about what this means, and how to comply.

What does SB 1162 require? Starting in January, employers with 15 or more workers will be required to disclose salary ranges in job postings, including on third-party sites. Companies with 100+ employees, including contractors, will have to report on mean and median wage data.

• The law only addresses base pay, not benefits, bonuses, or equity.
• In addition to these requirements, the law will require employers to reveal pay scales to employees who request that information about their current role.

Who has to comply with SB 1162? Any 15-plus-person company with employees in California will be subject to the law — even if your HQ is elsewhere.

• It’s unclear whether it will apply to companies with fewer than 15 workers based in California, but this will likely be clarified in the coming months, said Lulu Seikaly, senior corporate employment counsel at Payscale.

What if my employees are remote? The law doesn’t address remote work, and how this law applies to non-California workers who may want to know their role’s pay scale is still a “gray area,” said Rachel Conn, a San Francisco-based partner in the Labor and Employment group at the law firm Nixon Peabody.

• Conn said that large employers should be prepared for requests about pay scales from employees outside California. “You may see pressure from employees to have that information included, even if they’re not subject to the law,” Conn said. “It remains to be seen whether or not it’s going to encompass all remote workers.”
• Aaron Goldstein, a Seattle-based partner at the law firm Dorsey & Whitney, expects the law to only apply to California-based employees. “Generally speaking, the rule is that protections in the state law apply to the state where the employee lives and works.”

Didn’t California companies with 100+ employees already have to report pay data? Yes! Private companies with 100 or more employees started reporting their annual pay data by sex and race/ethnicity last year.

• The new law expands this requirement to include contract workers, and mandates that companies report their mean and median hourly wage data, said Emily Sweet, VP of social impact at OpenComp and lead executive of the OPEN (Organizations for Pay Equity Now) Imperative.
• “Private employers with 100 or more employees that are hired through labor contractors — third-party sources — must also complete a separate pay data report for their contractual employees as well,” Sweet said. “That is a real difference.”

Can companies get around this? After Colorado passed its pay transparency law, some companies tried to dodge the requirement to disclose pay ranges by excluding Colorado applicants in job ads.

• It’s unlikely that will be much of an issue in California because of the state’s huge labor force and wealth of employers.
• “I don’t think they’re going to be able to get around it in California, because once you have employees in California, California has all the protections of this law,” said Goldstein. “This law is going to primarily be concerned with companies that already have employees in the state.”