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Guide to the CA Pay Transparency Law

Starting Jan 1, 2023, employees of qualifying companies in CA have the right to see a pay band for their respective jobs.
Trying to understand the new ? We’ve got you covered with Homebrew’s Guide to the CA Pay Transparency Law.
Note: As always, this is a working document and we welcome your feedback. For more general information on Pay Transparency, please see . Please reach out to with comments or questions.
As a founder or talent leader, what do I need to know?

TL;DR Existing employees now have the right to see a pay band for their respective jobs.

Important details
The law will take effect January 1, 2023
This new law only applies to companies with 15+ employees who are based in CA.
The range is what the company provides based on comp benchmark data (Radford, Pave, Salary.com).
The law states that the employers must provide, upon an employee's request, the pay scale for the employee's current position. The legislation states that the job posting must include a range that the employer reasonably expects to pay for the position.
A few notes from Homebrew
Best practice is to avoid significantly broad ranges (especially at the higher end) unless the company is prepared to pay the higher end.
This data will not be posted publicly. It is only for internal purposes and needs to be accessible by all current employees.
Do other states that have a similar law? Yes, here’s a
. For specific information on a state, refer to the website.
The law does not address whether nationwide job postings must comply if the opening could be filled by someone in California. This is a contrast to the Colorado law.
The New York law will take effect November 2022. CA companies should review and take note how companies in New York are drafting job postings ahead of the January 2023 effective date in California.

What about contract workers?
If you employ 100+ individuals who came from third-party staffing agencies (W-2 contractors), you are now required to submit pay data reports to the California Civil Rights Agency for those workers, broken down by gender, race and ethnicity.
What are the pros of this new law?
Minimize wage discrimination based on gender and race. The US Census Bureau has estimated that women earn for every dollar earned by a man, and the gap widens for many women of color.
Salary transparency can protect against gender and racial bias. How? Well, if you think certain people are better negotiators, does this mean they should get paid more for the job at hand? No, it just means they are better negotiators.
Boost employee morale. People know their worth and they feel empowered.
Establish trust. People feel trusted when they are given information. Trust leads to greater engagement which helps improve retention.
Salary data can be used as a recruiting tool for benchmarking against other companies.
Are there downsides?
Information can be dangerous if used out of context. If employees have access to information they don’t fully understand, they may make incorrect assumptions.
If context isn’t provided regarding the “why” (nuances of roles and job families) people will be confused, frustrated and angry. The actual numbers aren’t the issue at this point. It is the lack of understanding regarding how the company came up with the numbers.
Summary
We hope this new law helps create a more equitable workplace. The law is open to interpretation on some level and more questions and guidance will come after the law has gone into effect. We recommend consulting an employment lawyer for questions around interpretation of this new law. For more general information on Pay Transparency, please refer to .

Resources

Thank you to and for your contributions to this guide.
Updated: 11.15.22
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