Governor Newsom just signed SB 642 into law, making big changes to California’s pay transparency and equal pay requirements. The law goes into effect January 1, 2026, and employers need to start preparing now.

For a full overview of the other employment bills signed and vetoed by the Governor impacting employers in 2026, you can read my earlier post here: New 2026 Employment Law Requirements in California: Key Bills Signed, Vetoed, and What’s Next. Zaller Law Group will also be hosting a webinar on October 30, 2025, covering SB 642 and other new employment laws for 2026 — details and registration link are included at the end of this post.

Here are five key updates California employers should know about SB 642:

1. “Pay scale” now means a good faith estimate of pay at hire

Employers must provide or post a realistic, good faith pay range reflecting what they actually expect to pay a new hire — not a broad range.
If you have 15 or more employees, that range must appear in all job postings.

2. Expanded definition of “wages” and “sex”

The bill clarifies that for Equal Pay Act purposes, “wages” and “wage rates” include all forms of pay — bonuses, stock options, benefits, travel reimbursements, and allowances.
“Sex” now tracks the definition under the Government Code, explicitly including gender identity and gender expression.

This ensures broader protection under California’s Equal Pay Act and increases the scope of what must be analyzed for pay equity.

3. Longer statute of limitations — up to six years of exposure

The time to bring an Equal Pay Act claim is now three years from the last date of the violation, and employees can recover for up to six years of pay disparity.

4. Recordkeeping and enforcement just got tougher

Employers must keep job title and wage history records for the duration of employment plus three years after separation.
The Labor Commissioner can inspect these records to determine if a pattern of wage discrepancy exists.
Penalties for failing to comply with pay scale posting rules range from $100 to $10,000 per violation, though first-time violators can avoid penalties by correcting postings.

5. Reminder of existing obligations under Labor Code section 432.3

Since January 1, 2018, when Labor Code section 432.3 was first adopted, California employers have been prohibited from relying on an applicant’s salary history information when determining whether to make an offer or what pay to offer.

While employers cannot ask about prior wage history, employees may voluntarily disclose how much they were paid in previous positions — but employers cannot rely on that information to set pay rates.

Upon a reasonable request by an applicant for a position — and upon request by a current employee — employers must provide the pay scale for the position.

Remember, employers cannot prohibit employees from discussing or disclosing their wages, or from refusing to agree not to disclose their wages under Labor Code sections 232(a) and (b). Employers also cannot require employees to refrain from discussing working conditions, or require them to sign an agreement restricting such discussions, under Labor Code section 232.5.

The Labor Commissioner’s FAQs interpreting section 432.3 clarify that employees may ask what other employees are paid, but employers are not required to provide that information. Employers should review those FAQs in the coming months to see if they are updated in light of SB 642.

Join Us for Our Upcoming Webinar

Zaller Law Group will be hosting a masterclass on October 30, 2025, covering the new employment laws facing California employers in 2026, including SB 642 and other key updates signed by Governor Newsom.
We’ll break down what these changes mean in practice and provide actionable steps to stay compliant heading into the new year. Registration for the masterclass is here.