{"id":88884,"date":"2022-12-20T21:53:23","date_gmt":"2022-12-20T19:53:23","guid":{"rendered":"https:\/\/factorialhr.com\/blog\/?p=88884"},"modified":"2024-11-21T14:14:02","modified_gmt":"2024-11-21T12:14:02","slug":"california-pay-transparency-law","status":"publish","type":"post","link":"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/","title":{"rendered":"What the California Pay Transparency Law 2023 means for you"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The new <\/span><span style=\"font-weight: 400;\">California <a href=\"https:\/\/www.gov.ca.gov\/2022\/09\/27\/california-advances-commitment-to-pay-equity-and-supporting-women\/\" target=\"_blank\" rel=\"noopener\">Pay Transparency Law<\/a><\/span><span style=\"font-weight: 400;\"> is creating a number of new requirements for employers with companies located in &#8220;<em>The Golden State<\/em>&#8220;. These obligations, which come into effect on January 1, 2023, relate to<\/span><b> pay scale disclosure and pay data reporting<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you run a business in California, then you <\/span><b>need to prepare for all the changes that are going to come into effect in a couple of weeks<\/b><span style=\"font-weight: 400;\">. This will help you avoid any hefty <\/span><b>non-compliance penalties<\/b><span style=\"font-weight: 400;\"> that may damage your business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But what is pay transparency, exactly? <\/span><b>What are the specific requirements of California\u2019s new pay transparency and pay scale disclosure law?<\/b><span style=\"font-weight: 400;\"> Which states have pay transparency laws? Is it just California? Or do employers from other states need to understand pay scale disclosure and transparency?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Read on for answers to these questions, and more.\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/factorialhr.com\/templates\/download-hiring-process-checklist\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"aligncenter wp-image-86575 size-medium\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18154654\/Hiring-checklist-new-300x300.jpg\" alt=\"Hiring checklist\" width=\"300\" height=\"300\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18154654\/Hiring-checklist-new-300x300.jpg 300w, https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18154654\/Hiring-checklist-new-150x150.jpg 150w, https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18154654\/Hiring-checklist-new-160x160.jpg 160w, https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18154654\/Hiring-checklist-new-80x80.jpg 80w, https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18154654\/Hiring-checklist-new.jpg 525w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p><b><div class=\"js-toc toc\">\n<p class=\"js-toc-title toc__title\">Table of Contents<\/p>\n<nav id=\"fac_toc_nav\" class=\"js-toc-nav toc__nav\" aria-label=\"Table of Contents\"><ol class=\"toc__list toc__list--level-1\"><li class=\"toc-heading-level-2\"><a class=\"toc__link toc-link-heading-1\" href=\"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/#california-pay-transparency-law-overview\" title=\"California pay transparency law overview\u00a0\" data-target-id=\"california-pay-transparency-law-overview\">California pay transparency law overview\u00a0<\/a><\/li><li class=\"toc-heading-level-2\"><a class=\"toc__link toc-link-heading-2\" href=\"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/#pay-scale-disclosure\" title=\"Pay scale disclosure\u00a0\" data-target-id=\"pay-scale-disclosure\">Pay scale disclosure\u00a0<\/a><\/li><li class=\"toc-heading-level-2\"><a class=\"toc__link toc-link-heading-3\" href=\"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/#pay-data-reporting\" title=\"Pay data reporting\u00a0\" data-target-id=\"pay-data-reporting\">Pay data reporting\u00a0<\/a><\/li><li class=\"toc-heading-level-2\"><a class=\"toc__link toc-link-heading-4\" href=\"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/#california-pay-transparency-law-non-compliance-penalties\" title=\"California pay transparency law: non-compliance penalties\u00a0\" data-target-id=\"california-pay-transparency-law-non-compliance-penalties\">California pay transparency law: non-compliance penalties\u00a0<\/a><\/li><li class=\"toc-heading-level-2\"><a class=\"toc__link toc-link-heading-5\" href=\"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/#california-pay-transparency-law-preparation-for-employers\" title=\"California pay transparency law: preparation for employers\u00a0\" data-target-id=\"california-pay-transparency-law-preparation-for-employers\">California pay transparency law: preparation for employers\u00a0<\/a><\/li><li class=\"toc-heading-level-2\"><a class=\"toc__link toc-link-heading-6\" href=\"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/#california\u2019s-existing-salary-history-law\" title=\"California\u2019s existing salary history law\u00a0\" data-target-id=\"california\u2019s-existing-salary-history-law\">California\u2019s existing salary history law\u00a0<\/a><\/li><li class=\"toc-heading-level-2\"><a class=\"toc__link toc-link-heading-7\" href=\"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/#benefits-of-pay-transparency\" title=\"Benefits of pay transparency\u00a0\" data-target-id=\"benefits-of-pay-transparency\">Benefits of pay transparency\u00a0<\/a><\/li><li class=\"toc-heading-level-2\"><a class=\"toc__link toc-link-heading-8\" href=\"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/#pay-transparency-in-other-states\" title=\"Pay transparency in other states\u00a0\" data-target-id=\"pay-transparency-in-other-states\">Pay transparency in other states\u00a0<\/a><\/li><\/ol><\/nav><\/div><\/b><\/p>\n<h2><strong>California pay transparency law overview\u00a0<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">California is joining a number of other states, cities, and local governments by legislating new requirements that promote <\/span><b>transparency in the workplace<\/b><span style=\"font-weight: 400;\">. The California Pay Transparency Law (<\/span><a href=\"https:\/\/leginfo.legislature.ca.gov\/faces\/billNavClient.xhtml?bill_id=202120220SB1162\"><span style=\"font-weight: 400;\">Senate Bill 1162<\/span><\/a><span style=\"font-weight: 400;\">), which comes into effect on <\/span><b>January 1, 2023<\/b><span style=\"font-weight: 400;\">, requires all companies with employees based in California to <\/span><b>share pay scale data with current employees and prospective candidates<\/b><span style=\"font-weight: 400;\">. The new employment law also establishes <\/span><b>employer obligations relating to pay data reporting<\/b><span style=\"font-weight: 400;\">. Failure to comply with this law can result in <\/span><b>civil liabilities<\/b><span style=\"font-weight: 400;\"> and hefty <\/span><b>non-compliance penalties<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">California\u2019s new pay transparency and pay scale disclosure law has one primary objective: to <\/span><b>promote equal and transparent pay for all<\/b><span style=\"font-weight: 400;\">. With this law, the state hopes to build on the existing work it has done to <\/span><b>identify and eliminate wage disparities<\/b><span style=\"font-weight: 400;\">. This includes <\/span><a href=\"https:\/\/women.ca.gov\/wp-content\/uploads\/sites\/96\/2017\/12\/FAQs.California-Equal-Pay-Act.pdf\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">The Equal Pay Act<\/span><\/a><span style=\"font-weight: 400;\">, which is one of the strongest equal pay laws in the nation. It also includes <\/span><a href=\"https:\/\/calcivilrights.ca.gov\/employment\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">The California Fair Employment and Housing Act (FEHA<\/span><\/a><span style=\"font-weight: 400;\">), which protects employees from discrimination, retaliation, and harassment in employment.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">California\u2019s new pay transparency law will apply to <\/span><b>all companies with at least one employee based in California<\/b><span style=\"font-weight: 400;\">, regardless of where the company\u2019s headquarters is located. Furthermore, <\/span><b>companies with at least 100 employees must comply with the new data reporting obligations<\/b><span style=\"font-weight: 400;\"> which serve as an extension of the <\/span><a href=\"https:\/\/www.eeoc.gov\/data\/eeo-1-data-collection#:~:text=The%20EEO%2D1%20Component%201,ethnicity%2C%20sex%20and%20job%20categories.\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Equal Employment Opportunity Commission\u2019s EEO-1 form<\/span><\/a><span style=\"font-weight: 400;\"> and existing California law. Failure to do so can result in <\/span><b>civil penalties and legal action<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2><strong>Pay scale disclosure\u00a0<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Pay scale transparency isn\u2019t an entirely new concept in California. <\/span><b>Existing employment laws already require employers in the state to share pay scale data with job applicants upon reasonable request<\/b><span style=\"font-weight: 400;\">. However, as of January 1, 2023, this requirement will be <\/span><b>expanded to include all applicants and all existing employees<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Specifically, the California Pay Transparency Law will require employers to:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Include pay scale data in all published job advertisements<\/b><span style=\"font-weight: 400;\"> (for companies with 15 or more employees). If the employer uses a third party to advertise a job, they must provide them with a pay scale to include in their posting.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Disclose the pay scale for a position that an employee currently holds<\/b><span style=\"font-weight: 400;\">, upon request.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">According to the new pay scale disclosure, the term \u201cpay scale\u201d is defined as \u201c<\/span><i><span style=\"font-weight: 400;\">the salary or hourly wage range that the employer reasonably expects to pay for the position<\/span><\/i><span style=\"font-weight: 400;\">\u201d. The law, however, does not specify if this includes benefits or bonuses.\u00a0\u00a0\u00a0<\/span><\/p>\n<h2><strong>Pay data reporting\u00a0<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">The new California Pay Transparency Law also defines a number of <\/span><b>pay data reporting obligations<\/b><span style=\"font-weight: 400;\"> that you need to be aware of.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Firstly, according to the pay transparency law, you must <\/span><b>maintain accurate records of all job descriptions and wage histories for all your employees<\/b><span style=\"font-weight: 400;\">. You must maintain these records for the <\/span><b>duration of their employment plus an additional three years<\/b><span style=\"font-weight: 400;\">. This protects you in the event that the <\/span><b>California Labor Commissioner<\/b><span style=\"font-weight: 400;\"> chooses to inspect your records to determine if there is a pattern of <\/span><b>wage discrepancy<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The second obligation relates to the filing of employee records. As the law currently stands, <\/span><b>all private employers in California with 100 or more employees are required under federal law to file annual Employer Information Reports (EEO-1) with the Equal Employment Opportunity Commission (EEOC)<\/b><span style=\"font-weight: 400;\">. Depending on employment status, some companies are also required to submit annual <\/span><b>pay data reports to the state\u2019s Civil Rights Department (CRD)<\/b><span style=\"font-weight: 400;\">. This includes data relating to pay, hours worked, job category, and demographic data including sex, race, and ethnicity.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The California Pay Transparency Law of 2023 has extended these obligations. All private employers with 100 or more employees must now submit pay data reports to the CRD. You need to do this by the second Wednesday of May each year. <\/span><b>This rule applies even if you were not previously required to submit EEO-1 reports <\/b><span style=\"font-weight: 400;\">(if you hire labor contractors, for example). The range of data that you must report, together with listed job categories, has also been expanded.\u00a0<\/span><\/p>\n<h3><strong>Data reporting categories<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">As of January 1, 2023,<\/span><b> the range of data that must be submitted to the CRD by all employers will be expanded<\/b><span style=\"font-weight: 400;\">. This will apply to all employees and all contractors.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Specifically, employers in California will need to file annual reports on:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Number of employees by race, ethnicity, and sex in each of the following job categories:<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Executive or senior-level officials and managers<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">First or mid-level officials and managers<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Professionals<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Technicians<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Sales workers<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Administrative support workers<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Craft workers<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Operatives<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Laborers and helpers<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Service workers<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The number of employees by race, ethnicity, and sex, whose annual earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics, as established in the <\/span><a href=\"https:\/\/developer.dol.gov\/expanding-growth\/bls-occupational-employment-statistics-survey-oes\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Occupational Employment Statistics Survey<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Median and mean hourly rate for each job category, according to race, ethnicity, and sex.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Total number of hours worked by each employee in each pay band during the reporting year.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The employer\u2019s <\/span><a href=\"https:\/\/www.census.gov\/naics\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">North American Industry Classification System<\/span><\/a><span style=\"font-weight: 400;\"> (NAICS) code.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Essentially, this means that you will have to <\/span><b>count how many employees you have in each job category in a reporting year and classify them by race, ethnicity, and sex<\/b><span style=\"font-weight: 400;\">. You will also need to keep a record of how many hours they are working, and how much you are paying them.<\/span><\/p>\n<h2><strong>California pay transparency law: non-compliance penalties\u00a0<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">It\u2019s important to be aware of these changes to pay transparency. If you fail to comply with new <\/span><b>obligations relating to pay scale disclosure and pay data reporting,<\/b><span style=\"font-weight: 400;\"> then it can lead to <\/span><b>significant non-compliance penalties<\/b><span style=\"font-weight: 400;\"> for your business.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If any of your current or past employees feel that you have not been transparent about your pay scales, then they will be within their rights to <\/span><b>file a complaint about you with the <\/b><a href=\"https:\/\/www.dir.ca.gov\/dlse\/\" target=\"_blank\" rel=\"noopener\"><b>California Division of Labor Standards Enforcement<\/b><\/a><b> (DLSE)<\/b><span style=\"font-weight: 400;\">. Candidates who have applied for a position at your company can also file a lawsuit claiming <\/span><b>violation<\/b><span style=\"font-weight: 400;\">\u00a0if they feel you have <\/span><b>failed to disclose pay scale data during the application and hiring process<\/b><span style=\"font-weight: 400;\">. If the DLSE finds that you are in violation of the California pay transparency law, then you could incur a penalty of between <\/span><b>$100 and $10,000 per violation<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In terms of recordkeeping, if you are <\/span><b>investigated by the California Labor Commissioner<\/b><span style=\"font-weight: 400;\"> and they find that you have not maintained accurate pay data records or provided the CDR with the necessary data, then you could also be liable for a <\/span><b>non-compliance penalty<\/b><span style=\"font-weight: 400;\">. In this case, the CRD would be entitled to <\/span><b>seek a court order requiring compliance. They can also recover all associated legal costs from you on top of the civil penalties that you could incur<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<h2><strong>California pay transparency law: preparation for employers\u00a0<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">If you have a business in California or hire employees who are based in the state, then you need to <\/span><b>prepare for the changes that the California Pay Transparency Law will bring in next month<\/b><span style=\"font-weight: 400;\">. This includes the <\/span><b>obligation to disclose pay scales in all your job postings<\/b><span style=\"font-weight: 400;\"> and the <\/span><b>requirement to maintain and file comprehensive pay scale records<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are a few best practices to help you prepare for pay transparency.\u00a0\u00a0<\/span><\/p>\n<h3><strong>Create a pay transparency policy<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">The first step in ensuring internal and external pay transparency is designing a thorough pay transparency policy. This policy should define <\/span><b>how salary data is collected and processed<\/b><span style=\"font-weight: 400;\">. It should also explain <\/span><b>how job descriptions are defined and organized<\/b><span style=\"font-weight: 400;\"> and <\/span><b>how they fit into the framework of the company<\/b><span style=\"font-weight: 400;\">. The clearer you are with your job descriptions, the easier it will be to justify your salaries.\u00a0\u00a0<\/span><\/p>\n<h3><strong>Design a pay strategy\u00a0<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">It\u2019s also a good idea to <\/span><b>determine specific salary ranges for all the positions in your organization<\/b><span style=\"font-weight: 400;\">. Start by listing the specific <\/span><b>roles and responsibilities of each position<\/b><span style=\"font-weight: 400;\"> and the specific <\/span><b>skills and experience<\/b><span style=\"font-weight: 400;\"> that the people filling those roles need. Establish <\/span><b>benchmarks for lower and higher salary ranges for each position<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What skills and levels of performance will you reward? How do you calculate bonuses? Are your salary ranges up to date and competitive compared to the external market?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Make sure you <\/span><b>define a clear pay scale for each position in your company<\/b><span style=\"font-weight: 400;\">. This will make it easier to ensure salaries are negotiated <\/span><b>fairly and consistently<\/b><span style=\"font-weight: 400;\"> during the hiring process.\u00a0<\/span><\/p>\n<h3><b>Promote pay equity\u00a0<\/b><\/h3>\n<p><b>Pay equity is the driving force behind the California pay transparency law<\/b><span style=\"font-weight: 400;\">. So, it stands to reason that the fairer each salary is relative to other positions in your company, the easier it will be to promote an open and transparent culture.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The best way to assess whether you are an equal-pay employer is by conducting a <\/span><b>pay equity audit<\/b><span style=\"font-weight: 400;\">, also known as a <\/span><a href=\"https:\/\/factorialhr.com\/blog\/pay-equity-analysis\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">pay equity analysis<\/span><\/a><span style=\"font-weight: 400;\">. Essentially, this means analyzing all your salaries in order to <\/span><b>identify and correct potential wage disparities<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Take a look at similar roles within your company to see if you are paying all employees the same. Can you directly attribute any differences in wages to gender, race, age, or any other unjustified criteria?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you\u2019ve identified pay gaps that you cannot reasonably justify, you need to correct them as soon as possible. The aim is to <\/span><b>ensure equal pay for all employees performing the same duties, regardless of gender, race, or any other defining characteristics<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h3><strong>Review your data collection processes and use the right software<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">The final step in preparing for the California Pay Transparency Law of 2023 involves reviewing your <\/span><b>internal data collection processes<\/b><span style=\"font-weight: 400;\">. This is important because you need to <\/span><b>make sure you are collecting all the data you need to compile your pay data report<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The easiest way to ensure compliance in this regard is by using the right <\/span><b>HRIS or HR software solution<\/b><span style=\"font-weight: 400;\">. This will help you streamline your processes for collecting, managing, and analyzing your employee data. It will also help you process your data in a safe and secure manner.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What solution are you using to manage <\/span><a href=\"https:\/\/factorialhr.com\/blog\/payroll-security\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">payroll security<\/span><\/a><span style=\"font-weight: 400;\"> right now? Does your <\/span><a href=\"https:\/\/factorialhr.com\/blog\/payroll-software\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">payroll software<\/span><\/a><span style=\"font-weight: 400;\"> include features for accurate recordkeeping? Do you have a clear record of all job descriptions and pay scales? If not, then <\/span><b>now is the time to invest in a solution so that you are prepared for the changes in January<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><a href=\"https:\/\/factorialhr.com\/get-started\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"aligncenter wp-image-86534 \" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18144227\/bENG_Blog_banner_900x308_A_v1.0-300x103.png\" alt=\"14 day free trial\" width=\"859\" height=\"295\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18144227\/bENG_Blog_banner_900x308_A_v1.0-300x103.png 300w, https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18144227\/bENG_Blog_banner_900x308_A_v1.0-1024x350.png 1024w, https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18144227\/bENG_Blog_banner_900x308_A_v1.0-768x263.png 768w, https:\/\/factorialhr.com\/wp-content\/uploads\/2022\/11\/18144227\/bENG_Blog_banner_900x308_A_v1.0.png 1350w\" sizes=\"(max-width: 859px) 100vw, 859px\" \/><\/a><\/p>\n<h2><strong>California\u2019s existing salary history law\u00a0<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">We\u2019ve discussed the new California pay transparency law, but let\u2019s clarify what California\u2019s existing salary history law is too. That way, you will be clear on <\/span><b>what your obligations are now, as well as the additional pay transparency obligations that will come into effect in January<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Right for employees to discuss pay<\/b><span style=\"font-weight: 400;\">. Employers must provide pay scales upon reasonable request by an applicant (employees will not have this right until January). They also cannot limit an employee\u2019s right to discuss pay in a workplace environment.\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Employers cannot ask applicants about their previous salary<\/b><span style=\"font-weight: 400;\">. As with many other states, you cannot ask an applicant about their salary history during the hiring process. You can, however, ask them about their salary expectations.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>California\u2019s Equal Pay Act (EPA)<\/b><span style=\"font-weight: 400;\">. Section 1197.5 of this act aims to ensure there is equal pay across all genders and races. This applies to all workers who do \u201csubstantially similar\u201d work. However, employers can justify disparities in certain conditions. For example, if a disparity is based on a seniority or merit system then it is considered justifiable. The same applies if it is a direct result of education, training, or experience.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Fair Employment and Housing Act<\/b><span style=\"font-weight: 400;\">. The FEHA prohibits the discrimination of applicants and employees belonging to a protected category, such as race, religion, or gender.\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>The National Labor Relations Act<\/b><span style=\"font-weight: 400;\">. Protects an employee\u2019s right to discuss wages and working conditions.\u00a0<\/span><\/li>\n<\/ul>\n<h2><strong>Benefits of pay transparency\u00a0<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Let\u2019s take a look at some of the <\/span><b>specific benefits of promoting pay transparency in your organization<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Helps to<\/span><b> close the <\/b><a href=\"https:\/\/factorialhr.com\/blog\/gender-racial-pay-gap\/\" target=\"_blank\" rel=\"noopener\"><b>gender and racial pay gap<\/b><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Increased diversity, equity, and inclusion in the workplace<\/b><span style=\"font-weight: 400;\">. This, in turn, improves the employee experience and helps you encourage a nurturing workplace culture. And this is a great way to create a more positive employer brand.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Ensures <\/b><a href=\"https:\/\/factorialhr.com\/blog\/hr-compliance-laws\/\" target=\"_blank\" rel=\"noopener\"><b>HR compliance<\/b><\/a><span style=\"font-weight: 400;\"> in terms of California\u2019s new pay data reporting and pay scale disclosure obligations, especially if you include your obligations in an <\/span><a href=\"https:\/\/factorialhr.com\/blog\/hr-compliance-checklist\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">HR compliance checklist<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Access a wider pool of quality talent<\/b><span style=\"font-weight: 400;\">. By creating more diverse and inclusive hiring practices you get access to a wider variety of talent and experience. For example, increased pay transparency often attracts more women and candidates from minority backgrounds.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Increased productivity<\/b><span style=\"font-weight: 400;\">. When you are transparent about pay scales, your employees are more likely to feel that you are paying them fairly. They will also feel more valued. All this boosts performance and employee engagement.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Attract and retain top talent<\/b><span style=\"font-weight: 400;\">. Transparency builds trust. Being open and honest about your pay scales shows your employees and candidates that they can trust you. This makes it much easier to build loyalty and to attract and retain top talent.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Streamlines your hiring process<\/b><span style=\"font-weight: 400;\">. Pay transparency makes the hiring process run more smoothly. This is because you remove the uncertainty of salary negotiation. That way, candidates and interviewers can focus on other important matters during the hiring process. Being upfront about your salaries also stops you from wasting your time interviewing candidates whose salary expectations you cannot meet.<\/span><\/li>\n<\/ul>\n<h2><strong>Pay transparency in other states\u00a0<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">As we mentioned earlier in the post, <\/span><b>California isn\u2019t the only state to implement laws that promote pay transparency<\/b><span style=\"font-weight: 400;\">. In fact, there are currently 30 pay transparency laws in the US. This includes the states of <\/span><b>Connecticut, Maryland, Nevada, Rhode Island, and Washington<\/b><span style=\"font-weight: 400;\">, which all require employers to disclose information about salary ranges for open positions or promotions.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This list also includes <\/span><b>New York<\/b><span style=\"font-weight: 400;\"> and <\/span><b>Colorado <\/b><span style=\"font-weight: 400;\">where pay transparency laws have been enacted this year. For example, New York City requires job postings to include the minimum and maximum salary for the position. And in Colorado, job vacancies must disclose the hourly wage or salary. They must also include a general description of all offered benefits.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Although many states such as these have enacted laws to prevent pay discrimination and provide employees with the ability to discuss their salaries, compared to the California pay transparency law, <\/span><b>obligations are quite limited, and most states are yet to focus on the reporting of mean and median pay data to better identify gender and race-based pay disparities<\/b><span style=\"font-weight: 400;\">. This makes California a <\/span><b>pioneering state that is leading the nation towards a working environment and culture based on equity and fair pay for all<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The new California Pay Transparency Law is creating a number of new requirements for employers with companies located in &#8220;The Golden State&#8220;. These obligations, which come into effect on January 1, 2023, relate to pay scale disclosure and pay data reporting. If you run a business in California, then you need to prepare for all<a href=\"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/\" class=\"read-more\"> [&#8230;]<\/a><\/p>\n","protected":false},"author":80,"featured_media":88888,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[146],"tags":[],"class_list":["post-88884","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal-hr"],"acf":{"topics":false},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.5 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What the California Pay Transparency Law 2023 means for you<\/title>\n<meta name=\"description\" content=\"Employer obligations in terms of pay scale disclosure and pay data reporting. Best practices for California pay transparency law compliance\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/factorialhr.com\/blog\/california-pay-transparency-law\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What the California Pay Transparency Law 2023 means for you\" \/>\n<meta property=\"og:description\" content=\"Employer obligations in terms of pay scale disclosure and pay data reporting. 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