California Pay Transparency and Pay Data Reporting Law: Compliance Deadlines Fast Approaching

April 24, 2023 Advisory

Following a wave of pay transparency laws across the nation, California recently enacted Senate Bill (SB) 1162, which imposes several obligations on California employers, including disclosure of pay ranges and certain pay data reporting requirements.

Pay Transparency

At its core, SB 1162 requires California employers with 15 or more employees to include the pay scale for any position in any job posting. It further requires employers to provide the pay scale upon the request of any applicant. The law defines “pay scale” as the “salary or hourly wage range that the employer reasonably expects to pay for the position.”

The Department of Labor Standards Enforcement (DLSE) published guidance regarding an employer’s obligations under the pay transparency law. The key takeaways from that guidance are:

  • The law applies to employers who have 15 or more employees nationwide, so long as the employer has one employee in California.
  • The pay scale only needs to include the "salary or hourly wage range that the employer reasonably expects to pay for the position,” and not bonuses or other benefits.
  • The pay scale must be included in a job posting if the position “may ever be filled in California, either in-person or remotely.”
  • The job posting may not direct applicants elsewhere for the pay scale. It must be included in the posting.

Pay Data Reporting

SB 1162 also requires employers with 100 or more employees to file a “Payroll Employee Report” with the California Civil Rights Division (CRD) on an annual basis. A separate “Labor Contractor Employee Report” must also be filed by any employer with 100 or more workers hired through labor contractors. The reports must detail “[w]ithin each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate.” Employers are required to file the reports even if they do not file federal Employer Information (EEO-1) reports.

The deadline to file the pay data reports is “on or before the second Wednesday of May 2023, and on or before the second Wednesday of May of each year thereafter. For calendar year 2022, the reporting deadline falls on Wednesday, May 10, 2023.

However, the CRD recently announced it would “begin accepting ‘enforcement deferral requests’ from employers for the Labor Contractor Employee Reports.” The CRD further advised that “[r]equests will only be considered by employers registered in pay data reporting portal, and CRD will only accept requests through the portal.”

Once granted, the CRD will defer seeking an order of compliance with SB 1162 through July 10, 2023. In other words, employers who obtain deferral will have until July 10, 2023, to submit their Labor Contractor Employee Reports. Be aware, however, that employers may not seek deferral for the Payroll Employee Report, which must be submitted by May 10, 2023.

If you have questions regarding compliance, please reach out to the authors or your regular Armstrong Teasdale contact.

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