California Businesses, Are You Ready for New Employment Laws?

Governor Gavin Newsom recently signed a dozen California labor and employment bills into law. Managing employees without so many legal and workforce changes is challenging. Outsourcing human resources to Soteria HR enables you to focus on the success of your business. At the same time, we help you take preventative steps to protect your company against compliance and regulatory issues.

Here’s a quick look at just one of the laws (SB 1162) that will impact your business beginning January 1, 2023.

Compensation Changes Coming

Under current California law, employers are prohibited from asking job applicants about their salary history during the hiring process and are required to provide job applicants with pay scale information upon the job applicant’s request. However, beginning January 1, 2023, employers will have new pay scale obligations.

The new law specifies three changes:

  1. In addition to job applicants being able to request a pay scale for the position they are applying for, employers will be required to provide, upon request, a pay scale to a current employee for the position that they are currently working. The law defines pay scale as the salary or hourly wage range that the employer reasonably expects to pay for the position.
  2. Employers with 15 or more employees must include the pay scale information for a position in any of their job postings. If an employer uses a third party to post, publish, or otherwise make known a job posting, the employer must provide the pay scale to the third party, who must include it in the job posting.
  3. Employers must maintain records of job titles and wage rate histories for each employee for the duration of their employment plus three years after the end of employment for the California Labor Commissioner to determine if there are any wage discrepancies. The Labor Commissioner must be able to inspect the records. Employees can file a claim with the Labor Commissioner or file a civil action. If your company fails to keep records as required, you may face penalties, injunctive relief, or any other relief a court deems appropriate. Civil penalties range from $100 to $10,000. However, the Labor Commissioner will not assess a penalty for the first violation of the law if the employer demonstrates that all job postings for open positions have been updated to include the pay scale as required.

Pay Parity Particulars

California’s existing law requires a private employer with 100 or more employees to file an annual Employer Information Report (EEO-1) under federal law. Employers must include the following data in their reports:

  • The number of employees by race, ethnicity, and sex in each of the following ten job categories:
    1. Executive or senior-level officials and managers
    2. First or mid-level officials and managers
    3. Professionals
    4. Technicians
    5. Sales workers
    6. Administrative support workers
    7. Craftworkers
    8. Operatives
    9. Laborers and helpers
    10. Service workers
  • The number of employees by race, ethnicity, and sex, whose annual earnings fall within each of the pay bands as defined by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics survey
  • Total number of hours worked by each employee counted in each band during the reporting year; and North American Industry Classification System (NAICS) code

SB 1162 changes two items:

  1. Extended Deadline: The law extends the deadline for submitting your report from March 31 to the second Wednesday of May
  2. Defined Penalties: A court may impose a civil penalty of up $100 per employee the first time any employer fails to file. Then, a court may impose a civil penalty of up $200 per employee.

We work with business owners to set compensation ranges that will attract talent, provide clarity to staff about compensation practices, and promote fairness and equality while complying with employment and labor laws. Contact Soteria HR today.

Samantha Harwood