Senate Bill 1162 (SB 1162) imposes new obligations on employers, including sharing pay scale information in job postings and with current employees and revising employers’ pay data reporting requirements. SB 1162 takes effect on January 1, 2023.
SB 1162 Amends Labor Code Section 432.3 Regarding Salary and Wage Disclosures
Labor Code Section 432.3 applies to all employers with 15 or more employees. Current law requires an employer, upon reasonable request, to provide a position’s pay scale to an applicant applying for employment. SB 1162 expands existing law to require an employer upon request, to provide to an employee the pay scale for the position in which the employee is currently employed. SB 1162 further requires employers to include a position’s pay scale in any job posting the employer posts directly or through a third party. “Pay scale” means the salary or hourly wage range that the employer reasonably expects to pay for the position.
SB 1162 further requires employers to maintain records of the job title and wage rate history for each employee for the entire duration of the employee’s employment plus three years after the employee’s employment ends. The records must be open to inspection by the Labor Commissioner. If an employer fails to keep these records and an employee brings a claim that the employer violated Labor Code Section 432.3, the employer’s failure creates a rebuttable presumption in favor of the employee’s claim.
Any claim filed by an employee must be filed with the Labor Commissioner within one year after the date the applicant or employee learned of the violation. The Labor Commissioner has the authority to investigate the claims. If the Labor Commissioner finds that the employer violated Labor Code Section 432.3, the Labor Commissioner may order the employer to pay a civil penalty of between $100 and $10,000 per violation. Employees may also bring a civil action for injunctive relief or other relief, as the court deems appropriate.
SB 1162 Amends Section 12999 of the Government Code Regarding Pay Data Reporting
SB 1162 also modifies the pay data reporting obligations under existing law. Current law requires an employer that has 100 or more employees and is required to file an annual Employer Information Report (EEO-1) pursuant to federal law, to submit a California pay data report to the California Civil Rights Department (CRD), formerly called the Department of Fair Employment and Housing, by March 31 of each year. Certain entities are exempt from EEO-1 reporting, such as institutions of higher education.
SB 1162 instead requires any employer that has 100 or more employees, regardless of whether it is required to file an annual EEO-1, to submit a pay data report to the CRD. SB 1162 also revises the deadline for submission of the pay data report to be before the second Wednesday of May of each year beginning in 2023.
Employers with 100 or more employees hired through labor contractors, must submit a separate pay data report to the CRD for those employees by the same deadline. For purposes of SB 1162, a “labor contractor” means an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.
SB 1162 eliminates the requirement that employers with multiple locations submit a consolidated report that includes all employees, and instead requires employees to file one report for each establishment.
SB 1162 also expands the type of information an employer must include in the pay data report. Existing law requires that the pay data report include the number of employees by race, ethnicity, and sex in specified job categories within specific pay bands. SB 1162 requires the pay data report to include the median and mean hourly rate for each combination of race, ethnicity, and sex within each job category.
SB 1162 further eliminates an employer’s option to submit an EEO-1 to the CRD in lieu of filing the California pay data reporting. As such, for 2023, covered employers must complete both the EEO-1 and the California pay data report.
SB 1162 imposes new civil penalties on an employer who fails to file the pay data report. A court may impose a civil penalty not to exceed $100 per employee for an employer’s first failure to file the report, and a civil penalty not to exceed $200 per employee for a subsequent failure to file the report. Under SB 1162, the CRD remains able to obtain an order requiring an employer to comply with these provisions and to recover the costs associated with seeking the order for compliance.
(SB 1162 amends Section 12999 of the Government Code, and amends Section 432.3 of the Labor Code.)