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California’s pay transparency law became effective on
January 1, 2023, though it was lacking clarity on some key items at
the time of its passage. Our previous advisory describing the new
law, its requirements, and its unanswered questions can be found here. California’s Labor Commissioner has
now provided guidance regarding some (but not all) of these
issues, and that guidance is discussed below.
Who Must Comply?
The guidance clarifies that the 15-person coverage threshold is
nationwide with only 1 employee needing to be located in
California.
In addition, the guidance clarifies that if an employer hires a
third party to assist in its recruitment efforts, the employer must
provide the pay scale to the third party and the third party must
include such pay scale in the job postings.
The guidance also clarifies that the new statute applies to
California-based positions, regardless of whether the work is
performed in-person at a California facility or remotely if the
position may ever be filled in California. This interpretation
means that if an employer has at least one employee in California,
any nationwide job posting would have to include a pay scale unless
the employer is certain the position would not or could not be
performed in California. While the Labor Commissioner’s
guidance is not binding, the Commissioner’s interpretation will
be afforded significant deference in the litigation context. As a
result, employers should carefully consider whether the jobs for
which they are posting could be performed in California.
What Information Must be Included?
The new guidance clarifies that the “pay scale is not
required to include any compensation or tangible benefits provided
in addition to a salary or hourly wage, but employers may include
this information to make their recruitment efforts more
competitive.”
The guidance also states that employers who intend to pay a set
hourly amount, or a set piece rate amount, may provide those
amounts as opposed to a pay range. However, if the wage is based on
a piece rate or a commission, the piece rate or commission range
that employers reasonably expect to pay for the position must be
included in the posting.
How Must Pay Information Be Provided?
The guidance states that the pay scale must be included within
the posting, and employers cannot, for example, provide a link or a
QR code to an external document that contains the salary range.
What Does This Mean for Employers?
Covered employers should ensure that all job postings listed on
or after January 1, 2023 contain the necessary pay scale
information as non-compliance can be costly with civil penalties
for a single violation ranging from $100 to $10,000. While the
released guidance does not address all the open questions, the
Mintz Employment, Labor & Benefits group will provide further
updates and clarifications as additional guidance is released and
stands ready to assist with any pay transparency questions you
have.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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