California Answers (Some) Pay Transparency Questions

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. 

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