New California Salary Transparency Law

Section 432.3 of the California Labor Code currently requires employers to provide an applicant with the pay scale for a position upon the applicant’s reasonable request and prohibits certain inquiries by employers related to an applicant’s salary history. California’s new law, which goes into effect January 1, 2023, expands on this existing law, and provides the following:

  • Employers with 15 or more employees must: 
    • Include the pay scale for a position in any job posting (the term “Pay scale” is defined as the salary or hourly wage range the employer reasonably expects to pay for the position); and 
    • To the extent the employer engages a third party to announce, post, publish or otherwise make a job posting known, provide the pay scale to the third party, and the third party must include the pay scale in the job posting.
  • All employers must: 
    • Upon reasonable request, provide the pay scale for a position to an applicant for employment;
    • Upon request, provide a current employee the pay scale for the position in which the employee is currently employed; and
    • Maintain job title and wage rate history for each employee for the duration of their employment plus three years after their employment ends.

Employees aggrieved by an employer’s noncompliance with the pay disclosure requirements may file a complaint with the California Division of Labor Standards Enforcement (DLSE) within one year of the date they learned of the violation or file a civil action for injunctive relief. If the DLSE finds that an employer violated the law, employers may be subject to civil penalties of $100 to $10,000 per violation. 

Take Action: Companies should become familiar with the law’s requirements and should review compensation data, job postings, job descriptions, reporting requirements, and related policies and practices. Also, consider training management and human resources personnel on how to comply with the new requirements.