Complying with California’s New Pay Transparency Law

Earlier this month, we outlined new federal overtime pay regulations expected to be enacted later this year. In this post, we turn our attention to a new state-specific labor law that addresses pay transparency for California employers.

What Is ‘Pay Transparency’?

Pay transparency is a movement that has been gathering steam in the U.S. for several years. It’s defined as the practice of making salary ranges for positions at a company known to both employees and job seekers. As Payscale notes, the philosophy behind pay transparency is aimed at improving talent acquisition and retention. This doesn’t mean individual employees are compelled to make their salary public. Instead, employers must inform employees of the salary ranges for positions within the company and how those salaries are determined. Meanwhile, applicants to an organization that practices pay transparency don’t have to wonder what the job they’re applying for might pay.

The main goal of pay transparency is closing gender and race gaps in pay, but it is also being embraced as a way of treating employees more ethically and equitably. And California’s new wage transparency law takes a proactive approach.

What’s in the New Law?

Starting Jan. 1, 2023, employers with at least 15 workers were legally required to include pay ranges in job postings. In addition, current employees can now ask for the pay range for their positions. In addition, companies with more than 100 employees must provide more detailed salary information to California’s Civil Rights Department than was mandated previously.  This includes the median and mean hourly pay rate for each job category and for each combination of race, ethnicity, and gender (including employees who identify as nonbinary).

How Can I Make Sure My Company Complies with the Law?

Take these four steps:

  1. Assemble the Data – Organize your salary data by job level and job description, as well as by gender and race. Also, benchmark your company’s salary bands against competitors in your industry.
  2. Publish Accurate Data and Advertise Realistically – Obviously, businesses need to make sure that the salary ranges and development practices they report are accurate. But if, for example, you know that people you hire to fill a job will start toward the lower end of a salary range to start, you need to include that in your job listings.
  3. Deal with Any Inequities You Discover – The purpose of wage transparency is to uncover disparities in pay. No one expects every business to have 100 percent pay equity immediately, but once you discover problems, you do need to do the good-faith work of addressing them.
  4. Prepare Your Managers to Answer Questions – As with every other aspect of corporate life, communications is critical to compliance. As you prepare to release salary information, supply your management team with talking points so that tricky questions won’t catch them off guard. And make sure your salary messaging is consistent throughout your organization.

Arrow Staffing Sweats the Details

At Arrow, we can help you navigate employment law, whether it relates to wage transparency or hiring practices. We also are staffing experts dedicated to helping companies in Ontario and throughout Southern California meet their talent acquisition goals. To find out how we can handle your hiring and let you can focus on running your business, start here.

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