The California Department of Industrial Relations recently published FAQs with interpretive guidance on the state’s new pay transparency law. As we detailed in our October legal update, the new pay transparency law went into effect on January 1, 2023, and requires employers to provide pay scale information in job postings and to current employees upon request. While many details about this new law are still unclear, the DIR’s new guidance sheds some light on the law’s requirements.
Which Employers Must Comply?
The new Labor Code section 432.3 requires employers with 15 or more employees to include the pay scale for a position in any job posting. The FAQs explain that the Labor Commissioner interprets this requirement consistent with how it counts employees for the purpose of 2022 COVID-19 Supplemental Paid Sick Leave and minimum wage rates (see previously issued FAQs on this topic). If an employer reaches 15 employees at any point in a pay period (including in-state and out-of-state employees) and at least one employee is currently located in California, then that employer is subject to the new pay transparency law and must include the pay scale in job postings.
Note that all employers regardless of size must provide pay scale information to applicants and current employees upon request. See Cal. Lab. Code § 432.3(c)(1)-(2).
Job Posting Contents
The FAQs also clarify that the pay scale must be included in the posting – employers cannot link to the pay scale or include a QR code. In addition, if an employer engages a third party to announce or publish a job posting, the employer must provide the pay scale to the third party and the third party must include the pay scale within the job posting.
The pay scale does not need to include information about bonuses, tips, or any other benefits. The “pay scale” is limited to the “salary or hourly wage range the employer reasonably expects to pay for a position,” which may instead consist of a set hourly or piece rate amount if the employer intends to pay an hourly or piece rate wage for the position.
What About Remote Workers/National Job Postings?
Regarding remote workers or national job postings, the FAQs explain that pay scale information must be included in a job posting “if the position may ever be filled in California, either in person or remotely.”
When applying the new law, the Labor Commissioner and courts are likely to take a liberal approach favorable to employees and potential applicants (in favor of disclosure), so employers should include pay scale information if there is any possibility that the posting fits this description.
To ensure compliance with the new law, employers with 15 or more employees should ensure that all job postings posted on or after January 1, 2023 include the pay scale if the position may ever be filled in California. Employers who fail to comply may be subject to penalties ranging from $100 to $10,000 per violation.
The DIR will likely issue additional guidance in the coming months, so be sure to check the DIR’s website and FAQs for additional updates.