California Answers (Some) Pay Transparency Questions – Employment Litigation/ Tribunals

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California’s wage transparency law goes into effect on January 1, 2023, though there was lack of clarity on some key items at the time of its passage. You can find our previous advice outlining the new law, its requirements and unanswered questions. The California Labor Commissioner has now provided guidance on some (but not all) of these issues, and that guidance is discussed below.

Who must obey?

The directive clarifies that the coverage threshold of 15 people is nationwide when only one employee needs to be located in California.

Also, the guidelines clarify that if an employer hires a third party to assist in its recruitment efforts, the employer must provide the salary chart to the third party and the third party must include such a salary chart in the jobs.

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The guidance also clarifies that the new law applies to California-based jobs, regardless of whether the work is performed in-person at a California facility or remotely if the position may ever be filled in California. This interpretation means that if an employer has at least one employee in California, any nationwide job posting will have to include a salary scale unless the employer is certain that the job will not or cannot be performed in California. While the Labor Commissioner’s guidance is not binding, the Commissioner’s interpretation will be given significant respect in the legal context. As a result, employers should carefully consider whether the jobs they advertise for can be performed in California.

What information should be included?

The new guidelines clarify that “the salary scale does not have to include compensation or any tangible benefits provided in addition to salary or hourly wages, but employers may include this information to make their recruiting efforts more competitive.”

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The directive also states that employers who intend to pay a specified hourly amount, or a fixed rate amount, may provide these amounts in contrast to a wage range. However, if the salary is based on a piece rate or commission, the posting must include the rate or commission that employers reasonably expect to pay for the position.

How should payment details be provided?

The guidance states that the salary scale must be included in the advertisement, and employers cannot, for example, provide a link or QR code to an external document containing the salary range.

What does this mean for employers?

Covered employers should ensure that all job postings posted on or after January 1, 2023 contain the necessary pay scale information, as noncompliance can be costly with civil penalties for a single violation ranging from $100 to $10,000. While the published guidelines do not provide answers to all open questions, the Mintz Employment, Labor and Benefits Group will provide updates and additional clarifications as additional guidelines are published and is ready to assist with any questions you may have regarding salary transparency.

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The content of this article is intended to provide a general guide to the subject. Expert advice should be sought regarding your specific circumstances.

Popular articles on: Employment and Human Resources from the United States

Developments in labor laws towards 2023

Kramer Levin Naftalis & Frankel LLP

Ahead of a new year, it is important for employers to be aware of and plan for developments in various areas of labor law that have recently come into effect or will come into effect in 2023.


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