Effective January 1, 2023, employers with 15 or more employees are required to include the pay scale for the position in any job posting. SB 1162 amends Labor Code section 432.3 to add this obligation, among other items. As a reminder, Labor Code section 432.3, effective since January 1, 2018, prohibits California employers from asking applicants about prior salary history. Section 432.3 already required employers to provide applicants a pay scale upon reasonable request. We are receiving a lot of questions about the new requirements effective in 2023. This Friday’s Five (sorry I could not fit the requirements into five issues today) highlights some of the law’s key provisions that apply to all employers, and additional provisions that apply to employers with 15 or more employees:
- Starting on January 1, 2018, Labor Code section 432.3 prohibits California employers from relying on salary history information of an applicant in determining whether to make an offer to the applicant, and in determining the pay to offer. As discussed below, Labor Code section 432.3 has been amended each year and employers need to comply with the most current version which is effective January 1, 2023.
- However, employers are permitted to ask an applicant about their salary expectations for the position (as long as they do not ask what the applicant has earned in the past). Employees may voluntarily disclose how much they were paid at previous positions, but employers are prohibited from relying on prior salary information to justify a pay difference between employees of the opposite sex or different races or ethnicities, who are performing substantially similar work.
- The Labor Commissioner’s FAQs publish to interpret Labor Code section 432.3 provide that while employees may ask employers what other employees are paid, employers are not required to provide this information to employees.
- Rather, Labor Code section 432.3 requires that employers provide a pay scale for a position upon “reasonable request” to an applicant applying for employment. “Pay scale” is defined to mean a salary or hourly wage range. A more specific definition of “pay scale” is provided below. The prior version of this Labor Code section defined “reasonable request” as a request made after an applicant has completed an initial interview with the employer. However, this was removed effective January 1, 2023, and therefore employers must provide this information to any job applicants regardless of whether they have interviewed or not.
- Labor Code section 432.3 requires all employers to provide an employee with the pay scale for their current position upon request.
- An employer shall maintain records of a job title and wage rate history for each employee for the duration of the employment plus for three years after the end of the employment in order for the Labor Commissioner to determine if there is a pattern of wage discrepancy. These records shall be open to inspection by the Labor Commissioner. Failure to maintain these records creates a rebuttable presumption in favor of the employee’s claim.
- The Labor Commissioner has jurisdiction to enforce Labor Code section 432.3 with penalties ranging from $100 to $10,000 per violation. However, for a first offense, no penalty shall be issued if the employer updates all job postings for open positions to comply with the law.
- Remember, employers cannot prohibit employees from discussing or disclosing their wages, or for refusing to agree not to disclose their wages under Labor Code sections 232(a) and (b). In addition, employers cannot require that an employee refrain from disclosing information about the employer’s working conditions, or require an employee to sign an agreement that restricts the employee from discussing their working conditions under Labor Code section 232.5.
Employers with 15 or more employees:
- An employer with 15 or more employees shall include the pay scale for a position in any job posting.
- The Labor Commissioner FAQs explains that Labor Code section 432.3 “defines ‘pay scale’ to mean the salary or hourly wage range the employer reasonably expects to pay for a position. An employer who intends to pay a set hourly amount or a set piece rate amount, and not a pay range, may provide that set hourly rate or set piece rate.” The FAQs provide that “[a] legally compliant job posting only requires the ‘salary or hourly wage range that the employer reasonably expects to pay for the position.’” The FAQs also explain that other compensation “or tangible benefits provided in addition to a salary or hourly wage are not required to be posted.” However, if the hourly or salary wage includes piece rate or commission, then the posting must include this range as well.
- The law does not define “job posting.” This has left many questions for employers on whether a help wanted sign, or a banner indicating the establishment is hiring, must also include the pay scale.
- An employer with 15 or more employees that engages a third party to announce, post, publish, or otherwise make known a job posting shall provide the pay scale to the third party. The third party shall include the pay scale in the job posting.
- The Labor Commissioner interprets the law to require that “the pay scale must be included within the job posting if the position may ever be filled in California, either in-person or remotely.”