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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.
Homebrew Guides
Trying to understand the new
CA Salary Transparency Law
⁠
? 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
Homebrew's Pay Transparency Guide
⁠
. Please reach out to
beth@homebrew.co
⁠
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
list
⁠
. For specific information on a state, refer to the
Department of Labor
⁠
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.
https://www.nyc.gov/site/cchr/media/pay-transparency.page
⁠
⁠

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
82 cents
⁠
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
Homebrew's Pay Transparency Guide
⁠
.

⁠

Resources

⁠
Show Me the Money: California Enacts New Pay Disclosure Requirements
Pay transparency laws have gathered steam across the country. California follows Colorado, Connecticut, Maryland, Nevada, Rhode Island, Washington, New York City, Cincinnati, and Toledo, among other
www.littler.com
⁠
⁠
⁠
Wage Transparency: How Can Multi-State Employers Manage the
Pay equity, or the desire to achieve it, has been a hot topic for employers in the United States in the past several years. Due to a recent increase in legislation in many states and local
www.littler.com
⁠
⁠
⁠
California Legislature Passes Bill That Would Break New Ground on Pay Transparency Requirements
California’s legislature has passed a game-changing bill that would impose significant new requirements on employers in that state. The bill, which seeks to up the ante on pay transparency, is now headed to Governor Gavin Newsom who has until September 30, 2022, to sign it, veto it, or allow it to pass into law.
ogletree.com
⁠
⁠

⁠
Thank you to
Guissu Baier
⁠
and
Peter Navin
⁠
for your contributions to this guide.
Updated: 12.1.23
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