California’s SB 1162: New Requirements for Employee and Contractor Pay – CA HR Services

ByContent Manager
CA HR Services

On September 27, 2022, California Governor Gavin Newsom signed Senate Bill 1162 (SB 1162), also known as the Pay Transparency Act. This bill amends the current California Code to expand pay data reporting and increase pay scale transparency. These changes leave many employers wondering how the bill will impact their operations.

SB 1162: The Basics

SB 1162 will take effect January 1, 2023, and impacts employers with fifteen or more employees. The key provisions for this bill include those that impact pay scale requirements and those related to pay data reporting requirements:

  • Pay Scale Requirements:
    • SB 1162 requires employers with fifteen or more employees to include a pay scale range for each position when posting a job opening, regardless of whether it is an internal or external job posting. The employers must also provide the pay scale when posting to a third-party website.
    • Employers must provide employees with the pay scale for the position in which the employee is currently employed upon request.
    • All employers, regardless of size, must keep records for each employee, including their job title and wage rate history. Employers must keep these records for three years after employment has ended. These records must be available for inspection by the Labor Commissioner. If the employer fails to provide these records, there is a presumption in favor of an employee’s claim in instances where a violation has been alleged.
    • Under prior law, the California Civil Rights Department (CRD) could seek an order requiring employers to comply with reporting requirements and recover associated costs. SB 1162 amends section 12999 to allow the court to improve a civil penalty of up to $100 per employee on any employer who fails to file the required report and a civil penalty of up to $200 per employee for any subsequent violation.
  • Pay Data Reporting Requirements:
    • Pay data reports are now required. In 2023, this report is due on May 10. The pay data reports will be due the second Wednesday of May in subsequent years.
    • All private employers with one hundred or more employees are now required to submit a pay data report annually, whether or not they are required to submit the federal EEO-1 report. In addition, these employers are also required to submit a separate pay report for workers hired through labor contractors, such as temporary staffing firms.
    • Pay data reports must include the median and mean hourly rate for each combination of race, ethnicity, and sex in each job category.
    • Employers with multiple businesses or locations must submit a separate pay data report for each, with no requirement to complete a consolidated report.
    • Pay data reports must be made available in a format that allows the California Civil Rights Department to search and sort the information.
    • SB 1162 requires the Labor Commissioner to investigate complaints of violations of these requirements. The Commissioner is authorized to order an employer to pay civil penalties for any violations. Additionally, SB 1162 allows individuals to pursue civil actions for relief when their rights under the bill have been violated.

SB 1162 adds additional requirements for employers of all sizes. Employers should be preparing to comply with the new law, as it takes effect in just a few months. Contact CA HR Services for more information about SB 1162 compliance.

CA HR Services specializes in working with small and medium-sized companies to help develop legal, efficient, and appropriate HR processes and procedures that meet state and federal labor law requirements.