STATEWIDE – California employers will now have to include the salary range on job postings when seeking workers to hire. California’s Pay Transparency for Pay Equity Act – SB 1162, aims to to reduce gender and racial pay gaps.
Trusaic, a compliance software company, found that among executives, people of color were paid an average of $12,700 less annually than white executives. In manufacturing, the difference was $7,300.
Senator Monique Limón, D-Santa Barbara, author of the bill, said the only way to minimize this pay gap is to be more transparent. This allows the employee to make the best decisions possible about where they are applying.
The new law that went into effect January 1, applies to employers with 15 or more employees.
Previously, the state only required employers to provide an applicant with a pay range upon request.
Now, not only will they have to post the salary range, but also provide the pay range to current employees, upon request.
An applicant can file a complaint if an employer is not complying with the new law. The Labor Commissioner’s Office can issue penalties between $100 to $10,000 per violation. The state will not penalize an employer that omits pay range in a job posting for the first violation, as long as the information is added.
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In addition to wage transparency, companies with 100 or more employees will have to start reporting detailed worker pay data.
The California Chamber of Commerce previously opposed collecting pay data saying that it doesn’t account for variations in compensation – seniority, part-time work, and education. They said this could lead to an inaccurate report of a wage disparity.
Wage transparency laws across the country
Other parts of the country have enacted similar laws.
Colorado, Washington, and New York have all implemented laws for employers to include pay ranges in job postings. Some employers posted wide pay scales to appease the new law.
A Citigroup listed multiple New York city job openings with a range between $0 – $2 million. The company later clarified that the wide range was due to a computer glitch. The revised entry showed a salary range between $59,340 and $149,320.
Wide pay scale job postings raises the question – how wide a pay scale is appropriate?
California law defines pay scale as “the salary or hourly wage range that the employer reasonably expects to pay for the position.”