What employers should know about the new pay transparency law

On Behalf of | Dec 22, 2022 | Employment Law

Beginning on Jan. 1, 2023, a new law takes effect that most California employers need to know about. It reflects a larger trend toward more pay transparency for employees and applicants. 

California is usually ahead of the curve on employment laws. However, we’re actually behind Colorado, Washington, Nevada and, more recently, New York City on this one.  

Who needs to comply with the new law?

Under the new law, any business in the state with 15 employees or more needs to provide a wage or salary range for any job advertisement or listing. It also requires them to provide the same information if a current employee asks for the pay range on their own job or another one in the company.

Further, any employer who has at least 100 workers employees obtained through staffing companies or who work as independent contractors will be required to provide pay data by employee gender, race and ethnicity to the California Civil Rights Agency. Those who fought for this law have been particularly concerned about racial and gender pay disparities within the same job category that have gone unnoticed for many years. 

One fair pay advocate contends, “Women, and especially women of color, are literally being robbed of wages every year. That is money that could go to rent, food, diapers, education, retirement savings.” 

Why the law can be a positive thing for employers

While the new law will require more work and reporting, it should prevent costly and reputation-harming litigation. If employers can become aware of pay discrepancies (no matter how unintentional they are) that favor those who aren’t in protected categories, they can make adjustments that make wages more consistent. This can also lead to more overall employee satisfaction since employees can (and do) compare wages.

If you have questions regarding the implementation of the changes necessary to comply with the new law, it’s wise to seek legal guidance.


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