California Salary Transparency Law: What You Need to Know
As part of broader efforts to tackle pay disparities, California joined a growing number of states instituting California Salary Transparency Law mandates on employers. The stated goal is to provide applicants and employees with greater pay information to make informed decisions and ensure fair compensation.
Starting January 2023, employers with California State workers must disclose salary ranges on job postings if asked. Upon request, they must provide pay scale data for an applicant’s position. Supporters argue this will empower negotiations, highlight discriminatory pay gaps, and promote equitable pay. However, some employers worry it creates administrative burdens and hiring difficulties.
Understanding the details, challenges, and benefits of California’s salary transparency law will be key. Thoughtful compliance steps and employee communication can help mitigate risks and effect positive pay equity improvements.
History of Salary Transparency Reform in California
The push for pay transparency in California gained momentum in the wake of growing public concerns over income inequality and stubborn pay gaps for women and minorities:
- SB 358 (2015) – First required equal pay for “substantially similar work” regardless of gender, race, or ethnicity.
- AB 168 (2017) – Prohibited inquiry about salary history to set pay.
- AB 2182 (2020) – Strengthened pay data reporting requirements for companies with 100+ employees to identify areas of disparity.
- SB 1162 (2022) – Enacted new salary transparency provisions for job postings and applicant requests starting January 2023.
Many proponents view pay transparency as the necessary next step to close loopholes and empower employees with compensation data to make informed choices and self-advocate.
Who is Covered by California Salary Transparency Law?
California’s salary transparency requirements apply to all employers with at least 15 employees. Key thresholds:
- 15+ employees – Applies to organizations with any 15 or more employees within California across all locations/subsidiaries.
- Exempt employees – Salary disclosure mandates cover both exempt and non-exempt workers. All job openings and staff roles are included.
- Remote workers – Fully remote employees working in California fall under the law, even if the employer has no physical state locations.
- Contractors – Likely covers contractors classified as employees in California, but not independent contractors.
Some limited exemptions apply for positions under collective bargaining agreements or civil service systems with their own pay rules. Otherwise, most medium and larger California employers are subject.
Key Provisions of California Salary Transparency Law
California’s pay transparency law contains two central requirements taking effect in January 2023:
1. Disclosing Salary Ranges in Job Postings
- If asked by the applicant, employers must provide the pay scale for the position (minimum to maximum)
- Applies to postings for open roles like public job boards, employer’s website or internal listings
- Pay scale must be custom to the particular role, location, and employer – no generalized data
- Only requires ranges, not exact salary being offered to a particular candidate
2. Providing Pay Scale Data Upon Request
- Current employees can request the salary range for their current position
- Employers must provide the applicable pay scale data upon request
- No limits on how often employees can request their position’s pay range
No set pay range formats are mandated, as long as minimum to maximum is shown with reasonable specificity. Ranges can be listed as hourly, annual, or by periodic salary.
Exceptions and Exemptions to Salary Disclosure
A few circumstances allow omitting pay scales under the law:
- Openings where compensation has not been set yet – but range must be posted once determined
- Remote jobs not located in California
- Civil service positions with mandated public pay schedules already published
- Positions under collective bargaining agreements with pay set by contracts
- Temporary staffing agency assignments where the agency doesn’t set compensation
- Internal transfers/promotions where pay stays within the employee’s existing scale
But these exemptions are read narrowly. Employers have the burden of proof if citing an exemption from disclosure upon request.
Penalties for Violating the California Salary Transparency Law
Non-compliance with California’s pay transparency mandates can trigger enforcement actions:
- Penalties of $100 per applicant/employee denied required pay data if deemed willful failures
- Fines up to $10,000 for multiple willful violations found in Labor Commissioner audits
- Injunctions requiring employers to comply and provide training on the law
- Private litigation allows workers to sue for damages over violations
No penalties exist for employers making reasonable efforts to comply in good faith. But deliberate failures to disclose carry sanctions, in addition to employee relations damage.
Implementing California Salary Transparency Law Compliance Processes
To meet California’s new requirements, employers should implement processes like:
- Review job posting practices – Update templates to enable pay scale inclusion upon applicant request
- Identify position pay ranges – Confirm salary bands for each role to provide when asked
- Train recruiters and HR – Ensure staff can articulate pay range duties and process applicant/employee requests
- Update employee handbooks – Add policies summarizing the new pay transparency rights of workers
- Prepare manager guidelines – Help supervisors address pay range questions in interviews or from current staff
- Review contractor classifications – Ensure proper status of California contingent workers subject to transparency
- Evaluate remote workforce – Determine if fully remote workers fall under the law’s jurisdiction
- Create compliant response templates – Standardize replies providing required pay range data
- Audit occasionally – Periodically review compliance with posting disclosures and answering requests
Documented policies, training, and practices will support compliance and fair application.
Debates Around Salary Transparency
California’s transparency initiative generates debates:
Supporters argue:
- Promotes pay equity and closes discriminatory gaps based on gender, race, age, and disability by revealing disparities
- Empowers applicants and staff with data to negotiate fair pay and raises objectively
- Deters pay discrimination and retaliation by exposing compensation
- Pressures employers to set equitable pay standards and structures
Critics counter:
- Forces release of sensitive confidential business data that can aid competitor poaching
- Invites over-entitled expectations from applicants by flaunting pay ranges
- Risks employee relations problems and friction over pay comparisons
- Generates administrative burdens for employers to collect, disclose data
- Allows too frequent requests that disrupt operations and divert HR
The risks likely depend on how policies are communicated and applied. Transparent design and training will smooth the transition.
CommunicatingCalifornia Salary Transparency Law Internally
Implementing pay transparency rules requires thoughtful employee relations strategies:
- Explain the law’s intent to promote equity as part of diversity, inclusion, and belonging efforts
- Reinforce company pay-setting practices that benchmark fair market rates regardless of past salary histories
- Train managers on appropriate talking points if pay differences are questioned
- Highlight how regular performance reviews and ongoing skill development provide objective pay input
- Encourage employees to discuss pay concerns through HR channels for review
- Avoid framing the law negatively as an unwelcome administrative hassle
Proactive outreach and positive framing help gain employee trust that transparency supports compensation fairness.
FAQs on California Salary Transparency Law
California’s new requirements raise many questions:
