California Employers: California’s New Payscale Transparency Law now requires you to publish how much you pay your employees alongside your job postings! (Part II)

payscale mandatory

Employers are now required to be transparent with both applicants and current employees as to how much they pay.

The new pay transparency law encourages transparency in job postings for new applicants and amongst co-workers. Prospective job applicants and co-workers no longer have to guess what the payscale is for their prospective or current position, nor do they have to ask workers or co-workers what their pay is in order to determine the payscale for these positions. Rather, the new law would make the payscale readily available to both prospective and current workers.

Currently, employers are obligated to provide the pay scale range for any position an applicant has applied for upon reasonable request. However, the new law would also require an employer to provide a current employee the pay scale for his or her position upon request. Clearly, the bill aims to have transparency amongst co-workers as well.

In addition, beginning on January 1, 2023, employers with 15 or more employees must include the pay scale in all job postings- even if the job postings are through a third party (think of websites like Indeed and Craigslist). Prospective applicants no longer have to request the pay scale because the pay scale would be published automatically. The new bill would provide a level of payscale transparency even before the prospective employee applies for the job.

Not only do employers need to be transparent with prospective and current employees, but employers must also be transparent with the Labor Commissioner. Beginning on January 1, 2023, employers must be diligent in compiling the information, filing the pay reports on an annual basis, and maintaining the information for the proper duration. Employers are responsible for maintaining records of job title and wage rate history for all employees for the entire time he or she is employed plus an additional three years after termination of employment. Most importantly, these records will be subject to inspection by the Labor Commissioner at any time. The Labor Commissioner is entitled to review all of the documents in order to determine if there is a pattern of wage discrepancy.

Finally, the employers face very stiff penalties for failing to maintain proper records. An employer may receive a civil penalty ranging anywhere from the minimum of $100 up to a maximum penalty of $10,000 for each violation of these record keeping requirements. If the employer fails to keep these records, there will be a rebuttable presumption in favor of the employee. That means that if the employee makes any claims regarding his or her wages and the employer fails to maintain the records regarding the wages, the court will presume the employee’s claims are truthful unless proven otherwise. Thus, a heavy burden is placed on the employer to cover his bases and keep and maintain the proper records.

Clearly, California lawmakers are looking to eliminate pay disparity in the workplace. Although this is not a bad goal, the employers are being saddled with even more red tape. It is important for employers to stay abreast of these new laws coming down the pipeline and to make sure their human resources department is well trained and equipped to meet these burdens. The penalties are stiff and the consequences for failing to abide by these rules can be costly.