Job seekers in California will now be able to see salary ranges for open positions at companies with 15 or more employees.
Governor Gavin Newsom signed into law Senate Bill 1162, which aims to increase transparency regarding compensation for both potential and current employees.
Under the existing state law, employers are required to provide a pay scale for positions that applicants are applying for upon reasonable request.
The new law requires employers “to provide to an employee the pay scale for the position in which the employee is currently employed” if requested. Employers must also keep a record of jobs, job titles, and corresponding salary ranges.
Additionally, companies that have 100 or more workers hired through third-party staffing agencies as W-2 contractors will be required to submit pay data reports to the California Civil Rights Agency. The reports must include a gender, race, and ethnicity breakdown of the information.
If an employer of 15 or more people “engages a third party to announce, post, publish, or otherwise make known a job posting,” the listing must also include the pay scale for the open position.
“One contributor to the wage gap is that pay disparities are often ‘hidden from sight’ and worsen when no one is actively monitoring hiring practices,” the California Employment Lawyers Association wrote in support of SB 1162, per The Los Angeles Times. “Thus, employees and in many cases employers themselves — especially in larger companies — may not be aware of gender or race-[based] pay disparities that exist in their workforce.”
The California legislature has made other efforts to expand public understanding of compensation.
Under previously passed SB 973, companies with more than 100 employees were required to submit data regarding wages to the California Department of Fair Employment and Housing.
Salary transparency laws have already been adopted in several states.
As of January 2021, Colorado requires employers to list a salary range on all advertisements for jobs.
Nevada employers are required by law to disclose a salary range in an initial interview even if an applicant has not asked. Connecticut requires employers to provide a salary range if an applicant asks or if a job offer is extended. In Washington, employers must tell potential employees the minimum and maximum salary for a job if they inquire after an offer is made, per CNBC.
“California has the strongest equal pay laws in the nation, but we’re not letting up on our work to ensure all women in our state are paid their due and treated equally in all spheres of life,” said Newsom at the bill’s signing.
The new salary disclosure law goes into effect on Jan. 1, 2023 and will impact an estimated 200,000 companies.