Businesses and workers have questions about California’s new pay transparency law. CalMatters answers which companies need to post pay ranges in job openings, who can ask for their current pay scale, and more.
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A new California law that requires many businesses to add pay ranges to job descriptions has raised a lot of questions among both employers and employees.
The law has had an immediate impact: In early December, 41% of daily active job listings on Glassdoor in California had pay ranges provided by the employer, according to analysis from the company’s lead economist. By the end of December, it was up to 54%. By Jan. 8, when the law had been in effect for just over a week, it had climbed to 61%.
On top of the new rule about pay in job postings, the law also allowed employees to ask for the salary range for their current job, and has some new requirements around how companies keep pay records and report pay information to the state.
But just because a law has taken effect doesn’t mean everyone understands how it’s supposed to work, or who it applies to.
The hotline that the California Chamber of Commerce runs for its members has been getting at least one call per day, on average, about this new law — many more than they get about any other individual law, said Ashley Hoffman, a policy advocate. Based on the number of questions the chamber got, it decided to do an event for members focused on the new pay transparency law. The event had over 2,000 registrants, Hoffman estimates, one and a half to two times the usual amount.
Several readers also reached out to CalMatters about the new law. CalMatters sought answers from the state Department of Industrial Relations, the government agency charged with enforcing part of the law, as well as people advising businesses and workers on employment law to answer some questions.
Lots of employers seeking advice on how to comply with pay equity laws suggests that the laws are working, said Jacklin Rad, a lawyer who advises employers on California workplace laws at Jackson Lewis, a New York City-based law firm.
“They’re looking at their pay scales, not just for job postings, but they’re also taking a close look at their internal pay scales and pay ranges,” and conducting pay equity analyses, said Rad, who used to be a Deputy Labor Commissioner for the state of California.
Who has to post pay scales in job postings?
The law states that any employer with “15 or more employees” must include “the pay scale for a position in any job posting.”
The Labor Commissioner’s office, which is charged with enforcing this part of the law, has further guidance on its website about how it interprets this.
At least 1 of those 15 employees “must be currently located in California,” according to the Department of Industrial Relations website. And, for the companies this applies to, a job posting must have a pay range “if the position may ever be filled in California, either in-person or remotely.”
Who can ask for their current salary range?
Employees can ask their employer for the salary range for their current position, and the employer must provide it. This isn’t limited to employers of a specific size.
CalMatters has asked the department whether this applies to employees who don’t live in California but work for California-based companies, but has yet to receive an answer.
“I can see employers trying to argue differently, but I think ultimately, if it’s a California-based company, it doesn’t matter where the worker is, physically, if their work is remotely being performed to the benefit of a company in California,” said Mariko Yoshihara, Legislative Counsel and Policy Director for California Employment Lawyers Association, which co-sponsored the law.
Is there a limit to how big a pay range could be, and still be legal?
“No, there is no limit,” wrote Paola Laverde, a public information officer for the Department of Industrial Relations.
The law requires employers to post the range that it “reasonably expects to pay for the job,” she said. “Whether the posted pay scale reflects that reasonable expectation is a facts-specific determination. Any attempts to avoid the law by extremely large ranges will be subject to scrutiny.”
CalMatters has asked the department what sorts of facts it will consider in that determination, but has not yet received an answer.
“It needs to be something that’s defensible,” said Hoffman, with the chamber, about how the organization is advising businesses with questions about pay scales. If a company is hiring a technician, for example, and is really looking to hire entry-level technicians rather than highly experienced ones, that would inform the range, she said.
What can you do if you see a job posting that you think violates the law?
You can bring it to the attention of the labor commissioner by contacting any field office, either in person, over the phone (833-525-4635), or via email, said Laverde. This can be done anonymously.
Laverde also said that people can file retaliation complaints anonymously if they are alleging violations of the part of the law that requires pay scales in job postings. However, the retaliation complaint form seems to require a first and last name. CalMatters has asked the department how people wishing to file a complaint anonymously should proceed and awaits a response.
How will this law get enforced?
Different parts of the law will get enforced by different parts of the state government.
One part of the law requires companies with 100 or more employees to report more detailed data to the state on what they pay workers. The reports are used “in individual investigations of complaints of pay discrimination or other types of complaints of civil rights violations against employers,” Adam Romero, deputy director of executive programs at California’s Civil Rights Department, told CalMatters in December.
If companies don’t submit the required reports, the Civil Rights Department can seek a court order requiring them to comply. The department can also request that the court issue a penalty.
The part of the law that requires pay ranges in job postings and allows employees to ask for their current pay scale is enforced by the Labor Commissioner’s Office, which is within the Department of Industrial Relations. The Commissioner has begun accepting complaints for violations of the law and it “recently sent a letter to employers regarding the new law, and will soon launch a social media campaign about the law,” Laverde wrote.
People can file complaints through the Department of Industrial Relations website. The relevant paperwork to fill out for a violation of the law is a ‘retaliation complaint,’ Laverde said.
There are additional options when it comes to flagging job postings that may violate the law. “Non-compliant job postings may be brought to the attention of any (Labor Commissioner) field office, either in person, over the phone (833-525-4635), or via email,” wrote Laverde, and you can remain anonymous, she said.
People who are “aggrieved” by a violation of the law can also file civil lawsuits.
Who counts as an aggrieved person? It depends on the part of the law that has been violated, Laverde wrote. It could potentially be a job seeker, an applicant, or a current employee, said Hoffman, with the chamber.
Who can get fined and how much?
If companies don’t submit the required pay data reports to the Civil Rights Department, the department can pursue penalties. If the department requests a penalty, a court can assign a company a penalty of up to $100 per employee for a first violation, and up to $200 per employee for violations after that. So, the larger the company, the larger the potential penalty.
Employers who violate the part of the law that requires them to provide an employee with their current salary range upon request, keep records of employee pay and title, and — for employers with 15 or more workers — post pay scales in job postings, can be ordered by the Labor Commissioner to pay a civil penalty ranging from $100 to $10,000 per violation. The size of the penalty will be based on “the totality of the circumstances,” according to the law, which will include whether the employer has previously broken this law.
When it comes to payscales in job postings, one job posting without a pay range counts as one violation, Laverde said. So, five job postings without pay ranges would count as five violations.
Companies that don’t have pay ranges in job postings won’t get penalized for their first violation, so long as they add the information.
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