California employers will soon have to post salary ranges in job listings, under a state law intended to address unequal pay for women and minority groups.
“Studies show when there is no pay range, men are more likely to ask for more money than women are,” said San Francisco employment lawyer Jahan Sagafi. “Knowing what the pay range is going into salary negotiations will help applicants, especially women and people of color, to negotiate a fair wage. If we can start the negotiations with equal access to information and the same understanding of what the job pays, we’re likely to see fair outcomes based on merit, not … bias based on feelings, bluster, and negotiation confidence.”
The law also creates a new mandate for employers to disclose to existing employees the pay range for their jobs, if they request it. And it requires businesses to report new salary and wage data to the state’s Civil Rights Department.
“We’re not letting up on our work to ensure all women in our state are paid their due,” Newsom said in a statement last week, hailing “new transparency to tackle pay gaps” as he signed bill Senate Bill 1162 into law.
Submitted data showing possible pay discrimination could “definitely” lead to legal action by state authorities against an employer, Los Angeles employment lawyer Shardé Skahan said.
Pay gaps based on gender and ethnicity have posed a persistent problem for in the Bay Area and across the state. In Santa Clara County, women made 71 cents for every $1 their male counterparts earned in 2018, according to an analysis by the California Budget & Policy Center. Throughout California, wage gaps in 2020 cost women tens of billions of dollars, with the worst inequities among women of color, according to a report from software company Trusaic, which supported the bill and helps businesses address gender pay disparities.
Last week, HP Enterprise agreed to pay $8.5 million to settle a lawsuit accusing it of paying female California employees less than male workers. Mountain View digital advertising titan Google in June agreed to pay $118 million to settle a class-action lawsuit over claimed gender pay gaps. Santa Clara computer chip giant Intel in 2019 agreed to pay $5 million to settle federal charges that it discriminated in pay against female, African American and Latino employees.
Under the new law, which goes into effect Jan. 1, businesses with at least 15 employees will have to include the pay range in any job listing. Employers are not required to stay within the range, but paying below the low end has not been a problem in other jurisdictions, such as New York City, Colorado and Washington, where similar laws are in effect, Sagafi said. That’s “presumably because disclosure of the range makes it easy for employees to police (employers), and because going below the range would be so clearly dishonest that a company would not likely do it,” said Sagafi, whose firm Outten & Golden typically represents workers in labor disputes.
However, employment lawyer Skahan, whose firm Seyfarth Shaw typically represents employers, said a company could hire someone below the pay range if “an employee’s qualifications don’t warrant what the pay scale specifies for the position.”
The new law makes California the largest U.S. state to require public disclosure of pay scales in job postings, Skahan added.
Fines for breaking the law range from $100 to $10,000 per violation. Penalties will be waived upon a first violation if the employer shows all open job postings have been updated to include the pay scale.
Companies with 100 or more workers, many of whom were already required to provide a non-public pay-data report to state authorities, including numbers of employees by race, ethnicity and sex within job categories and pay bands, will have to detail the median and mean hourly pay rates “for each combination of race, ethnicity, and sex within each job category,” according to the law.
And for the first time, businesses employing 100 or more “employees hired through labor contractors” must report those workers’ pay, and they must provide the same detailed breakdown required for direct employees, including the hourly pay rates.
The expanded data collection will help state agencies identify patterns of wage inequality, and for employers, “simply compiling the data will uncover previously hidden pay disparities,” Sagafi said.
The bill originally mandated public disclosure of companies’ pay data, but that provision was stripped after employers objected, with Seyfarth Shaw testifying before a legislative committee on behalf of business lobby group CalChamber. The group had strongly opposed such disclosure on the basis that the data could create false impressions of wrongdoing by failing to reflect differing qualification levels within broad job categories.
The first pay disclosures under the law are due May 10.
