Synopsis of Seyfarth: SB 1162, which may soon be enacted, will require employers to report even more wage data to the California Department of Civil Rights (f/k/a the Department of Fair Employment and Housing through July 1 2022), including the median and mean. information on pay gaps. A key disputed provision that would have required the Civil Rights Department to publish compensation data online, however, was recently removed from the bill.
SB 1162’s mission: to demand more disclosure of salary data from employers. Realized? Almost. California’s latest pay transparency bill is expected to go into effect before September 30. With it, employers will be required to comply with a host of new wage data disclosure requirements.
A requirement originally included in the bill, however, did not survive the legislative process. While SB 1162 proposed that the Department of Civil Rights publish employers’ salary data on a public website, a recent amendment removed this requirement. So what happens to the granular compensation data that employers will report to the Department of Civil Rights? Only the Civil Rights Department will have access to this information.
Proponents of SB 1162 believe that the current law does not do enough to unearth unequal pay and, through SB 1162, seek to impose the following changes:
- Revise the deadline for submitting payroll data reports, with the new deadline falling annually on the second Wednesday in May of each year.
- Within each job category, SB 1162 would require employers to report the median and average hourly rate for each combination of race, ethnicity and gender. (Existing law, by comparison, only requires numerical counts of employees by race, ethnicity, and gender in each job category and pay band).
- Employers who have 100 or more employees hired through contractors would have a new requirement to report data on wages, hours worked, race/ethnicity and gender in a separate report. The most recent amendment to the bill requires labor contractors to “provide all necessary compensation data to the private employer,” but does not contain a separate mandate for labor contractors to collect the data. “necessary compensation data”, nor does it define the required data. or resolve issues related to the timing of such disclosures. The bill also attempts to hold labor contractors accountable by allowing a court to award an “appropriate amount” of any penalty to any labor contractor who failed to provide data. compensation required from the employer. This will be difficult to implement in practice as employers rarely have access to contractor salary and demographic data. The Department also requires employers to certify the accuracy of wage data reports, which would be virtually impossible to do with labor contractor data.
- Employers with more than 15 employees would be required to include a salary range in all job postings (and provide this information to third parties who post these jobs). New amendments to the bill would clarify that no penalty would apply for a first violation of this requirement if the employer can demonstrate that all job postings for vacant positions have been updated to include the ladder salary.
- All employers, regardless of size, would be required to provide a salary range for an employee’s current position when requested by the employee, in addition to the requirement under applicable law to provide applicants for the the salary range for the position the candidate is seeking.
- Employers with multiple establishments would no longer be required to submit a consolidated report; instead, employers would continue to be required to submit a report for each establishment.
No publication requirement
Initially, SB 1162 directed the department to publish payroll reports submitted by each employer. The employer community opposed this requirement and Seyfarth Shaw testified on this issue on behalf of Cal Chamber.
Shortly thereafter, on August 15, 2022, an amendment removed the public disclosure provision. If passed in its current form, the department would only be allowed to publish “aggregate” reports that do not associate wage data with individual employers.
The final vote in the California Assembly will take place the week of August 29, 2022, and if the bill passes, it will return to the Senate for approval of the amendments and approval of the transfer to Governor Newsom’s office – all of which must take place. by August. 31. The Governor has until September 30 to approve or veto the bill. If approved, the salary range disclosure requirements would come into effect on January 1, 2023. Updated compensation data reports, including information on the average and median pay gap, would be due from May 10, 2023.
Employers should start planning for compliance now, including compiling and reviewing data to identify areas that need attention.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.