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New California law requires employers to report pay data. What does it mean for businesses?

Natallie Rocha, The San Diego Union-Tribune on

Published in Business News

Gov. Gavin Newsom on Tuesday signed the state's pay transparency law that will require California businesses to disclose compensation and demographic data for their workers starting next year.

Under the new law, companies with 15 or more employees will be required to include pay ranges in job postings, and those with 100 or more employees or contractors will have to report median and mean hourly pay rates by job category and "each combination of race, ethnicity, and sex."

The state already requires companies with 100 employees or more to annually report pay data for existing employees and disclose the pay scale to job applicants upon request.

Here's what will change under the new law that goes into effect in May:

—The law sets a new precedent as the only state to mandate employers with 100 or more workers to annually report "within each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate."

—Additionally, businesses with 100 or more employees through labor contractors will need to submit a pay data report for those workers

 

—California will join Colorado, Washington, New York City and other local governments in requiring businesses with 15 or more employees to disclose a pay range on job postings.

—Private businesses with 100 or more employees must submit a pay data report to the state covering the prior year, on or before May 10, 2023. The business must submit the annual report on or before the second Wednesday of May each year after that.

—Employers must maintain a record of each employee's job title and wage history during their employment and for three years after.

The bill, SB 1162, was introduced by Sen. Monique Limόn (D-Santa Barbara) in February. Newsom signed it with the support of the Legislative Women's Caucus and has touted it in his effort to support equality and close pay gaps for women.

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