California poised to strengthen pay transparency, reporting mandates

California lawmakers passed Tuesday a law, SB 1162, that would require employers in the state to provide pay ranges when they announce, post, publish or otherwise make known an available job.

Additionally, large employers in the state with 100 or more employees would need to submit a pay data report supplementing existing annual EEO-1 reporting requirements. The proposal is part of a package of legislation which Gov. Gavin Newsom must decide whether to sign by Sept. 30, local media outlet CalMatters reported.

The bill would strengthen existing pay transparency requirements in the state. In 2018, California enacted a law requiring employers to provide the pay range for a given position to job applicants upon an applicant’s request and after the applicant completes an initial interview with the employer. Currently, 10 state or local jurisdictions require some form of pay transparency in recruiting.

Workers aggrieved by a violation of California’s proposed pay transparency statute would be entitled to injunctive relief or any other relief that the court deems appropriate, per the bill. The state’s labor commissioner also may employers that violate the statute to pay a civil penalty of up to $10,000 per violation.

Separately, the proposal’s pay data reporting requirements would require covered employers to submit a report including the total number of employees broken down by race, ethnicity and sex who fall within each pay band used by the U.S. Bureau of Labor Statistics’ Occupational Employment Statistics survey.

Within each job category on the report, employers would be required to include the median and hourly rate for each combination of race, ethnicity and sex. The report would utilize a “snapshot” of all employees in each job category for a single pay period of the employer’s choice between Oct. 1 and Dec. 31 of the reporting year. The pay data requested would be earnings as reported on the Internal Revenue Service Form W-2.

The California Business, Consumer Services and Housing Agency would be able to seek an order requiring employers to comply with these requirements and would be entitled to recover costs associated with seeking such an order, per the bill. Courts also would be able to impose up to $100 per employee in civil penalties on employers that refuse to comply and up to $200 per employee for any subsequent failure.

The agency would be required to maintain pay data reports for at least 10 years, and government officials would be able to develop and publish, on an annual basis, aggregate reports based on the data. However, officials would not be permitted to make public any individually identifiable information. Such information also would not be subject to disclosure via the California Public Records Act.

SB 1162’s pay data disclosure requirements are similar to those used by the U.S. Equal Employment Opportunity Commission during its collection of 2017 and 2018 calendar year data as part of EEO-1 Component 2. Component 2 has faced an uncertain future, however, given EEOC’s 2019 pause on renewing the collection. An analysis of Component 2 data by the National Academies of Sciences, Engineering and Mathematics, published in late July, concluded that the data “may be used effectively,” EEOC said.

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