In less than two weeks, job seekers in California will finally know how much a job pays when they apply for it 鈥� if companies don鈥檛 figure out a way around a .
Starting on Jan. 1, employers with at least 15 workers will have to include pay ranges in job postings. Employees will also be able to ask for the pay range for their own position, and larger companies will have to provide more detailed pay data to California鈥檚 Civil Rights Department than previously required.
California isn鈥檛 the first state to force businesses to put their cards on the table. took that step in 2019, and a similar requirement went into effect in in November. has its own version that will also kick in on Jan. 1, and a similar statewide was just .
The is to reduce gender and racial pay gaps. But New York City鈥檚 measure had a bumpy start, with some employers posting the first day the law was in place. When Colorado rolled out its law at the beginning of 2021, some companies posted remote jobs that they said could be done from anywhere in the U.S. 鈥� except Colorado 鈥� dodging the requirement. That wasn鈥檛 widespread; about 1% of remote job listings included a Colorado carveout, according to in The Atlantic.
But since California has nearly 7 times as many people as Colorado, according to U.S. Census data, excluding Californians in a remote job listing would come at a higher cost.
鈥淐alifornia鈥檚 just such a huge economic center,鈥� said Lisa Wallace, co-founder of Assemble, a compensation management platform. 鈥淭here just aren鈥檛 that many industries that are not going to be touched by this.鈥�
What鈥檚 the pay range?
Here鈥檚 what California job seekers can expect to see more frequently come January: to be a plumber in Berkeley; an hour for an assistant teacher job in Los Angeles; per year for a future compensation analyst in Davis. If companies aren鈥檛 adding ranges, people can sue or file a complaint with the Labor Commissioner鈥檚 Office, which can issue a penalty of $100 to $10,000 per violation. Companies that don鈥檛 have pay ranges in job postings won鈥檛 get penalized for their first violation, so long as they add the information.
In addition to preparing to post pay ranges in job listings, companies that don鈥檛 already have pay bands for current employees should put them in place, and they should make sure that there aren鈥檛 pay disparities based on race, sex, or other protected classes between employees doing substantially similar work, said Jacklin Rad, a lawyer who advises employers on California workplace laws at Jackson Lewis, a law firm.
Businesses are about to have their pay scrutinized by job candidates and employees, said Wallace, the compensation platform company co-founder. 鈥淵ou better make sure that you have a really strong answer for why an employee is paid less,鈥� than the posted range for a similar-looking job, she said. The new California law is uncovering that a lot of organizations have been operating without pay bands, Wallace said. Many of the company鈥檚 earliest customers were tech and biotech businesses, Wallace said, but since the bill was signed into law she鈥檚 seen increased interest from other sectors, including manufacturing and utilities.
One question that arose immediately when New York City鈥檚 law went into effect was how wide can a pay range be without violating the law? Some where the high end was about $100,000 more than the low end.
California鈥檚 law explains the required payscale as 鈥渢he salary or hourly wage range that the employer reasonably expects to pay for the position.鈥�
鈥淚t鈥檚 really ambiguous,鈥� said Rad, the lawyer. 鈥淎 lot of attorneys that work in this sphere ask themselves: 鈥榊ou know, if the range is too wide, then does that defeat the purpose of pay transparency?鈥欌��
CalMatters reached out to the Labor Commissioner鈥檚 office, which is charged with enforcing the payscale component of the law. The office didn鈥檛 make anyone available to be interviewed, and did not respond to a detailed list of questions about how the law will be interpreted.
California government agencies include pay scales in job postings, and some of the ranges are large. The Civil Rights Department, for example, recently had a posting for an 鈥淎ssistant Deputy Director, Workforce Data Officer鈥� with a listed pay range of $7,976 鈥� $19,321 per month, which translates to about $96,000 鈥� $232,000 per year. Another posting, for a Deputy Chief Counsel at the Civil Rights Department had a similar range.
Pay ranges are set by the state鈥檚 human resources agency, CalHR, and are influenced by bargaining with unions, said Adam Romero, deputy director of executive programs at California鈥檚 Civil Rights Department. Those two positions are 鈥渧ery senior,鈥� and most roles don鈥檛 have pay ranges that wide, Romero said.
Reporting pay data
The second major component of the new law is that businesses with 100 or more employees will have to start reporting more detailed data on what they pay workers to the state.
It builds on a 2020 that required companies to submit reports to the state鈥檚 Civil Rights Department breaking down how many employees they have in each job category and pay band by sex, race, and ethnicity. The goal was to enable state agencies to more identify wage disparities more efficiently, and to prompt companies to assess their own pay.
The reports are used 鈥渋n individual investigations of complaints of pay discrimination or other types of complaints of civil rights violations against employers,鈥� said Romero at the Civil Rights Department. The data on its own doesn鈥檛 prove there鈥檚 been a violation of the law, but it provides context, said Romero. The Civil Rights Department cited the pay data, for example, when it for race discrimination and harassment in February.
The law taking effect Jan. 1 requires employers to add median and mean hourly rate for each demographic group within each job category and include pay data for contractors.
鈥淲e are really trying to shine more light on this growing shadow workforce of contract workers,鈥� said Mariko Yoshihara, policy director for the California Employment Lawyers Association, which supported the new law. Google, for example, than full-time employees, according to New York Times鈥� reporting. The new law will reveal how contractors鈥� pay compares to that of full-time employees, Yoshihara said.
An early version of the new law would have made each company鈥檚 pay data public. But after intense pushback from business groups 鈥� who the data is not a reliable measure of pay disparities and that it would 鈥渟et up employers for public criticism with incomplete, uncontextualized reports and create a false impression of wage discrimination where none may exist鈥� 鈥� the to keep the reports private.
If companies don鈥檛 submit their pay data, the Civil Rights department can take action. It , the craft store chain, and for not submitting the data; both companies settled, paying a combined total of about $23,500 to cover the department鈥檚 fees and costs.
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