Pay transparency has become a growing priority in today’s workplace, as employees and lawmakers push for greater fairness and accountability in compensation practices. In California, new laws are leading the way by requiring employers to provide more visibility into how wages are determined and shared. For workers and businesses alike, understanding these requirements is essential to staying compliant and informed.
This guide breaks down everything you need to know about pay transparency California laws—who they apply to, what’s required, and how they affect job seekers, employees, and employers.
What Is Pay Transparency?
Pay transparency refers to the practice of openly sharing compensation information—such as salary ranges, job classifications, and criteria for pay decisions—with employees or job candidates. The goal is to eliminate pay discrimination, promote wage equity, and help individuals make informed decisions about their careers.
California’s pay transparency laws go beyond voluntary disclosure and make certain aspects of pay disclosure mandatory for many employers. These regulations are a part of the broader movement toward wage equality and closing the gender and racial pay gaps.
Overview of California’s Pay Transparency Laws
California’s most recent pay transparency legislation, Senate Bill 1162, went into effect on January 1, 2023, strengthening the state’s wage disclosure requirements. Here’s an overview of what the law requires:
1. Salary Range Disclosure in Job Postings
Employers with 15 or more employees must include a pay scale (i.e., hourly or salary range) in any job posting. This includes:
- Internal job postings
- External job advertisements
- Listings posted by third-party job platforms
This requirement is aimed at ensuring that job applicants have clear and upfront information about potential compensation, even before applying.
2. Pay Scale Disclosure Upon Request
All employers, regardless of size, are required to provide the pay scale for a current employee’s position if the employee makes a request. This enables workers to understand how their compensation compares to others in the same role and opens the door for fair wage discussions.
3. Record-Keeping Obligations
Employers must maintain records of each employee’s:
- Job title
- Wage history
- Pay scale
These records must be kept for the duration of employment plus three years and must be made available for inspection by the California Labor Commissioner upon request.
Who Must Comply?
Not every business is subject to every element of California’s pay transparency laws, but here’s a breakdown:
- All employers (regardless of size) must provide pay scale information to current employees upon request.
- Employers with 15 or more employees must include pay ranges in job postings.
- Employers with 100 or more employees must also comply with pay data reporting requirements (described below).
These rules apply to jobs that can be performed in California—even if the employer is located in another state.
Pay Data Reporting Requirements for Larger Employers
In addition to posting salary ranges, employers with 100 or more employees are required to file an annual pay data report with the California Civil Rights Department (CRD). This report must include:
- Number of employees by race, ethnicity, and sex
- Job categories and pay bands based on W-2 income
- Data on contractors (if applicable)
The report is due by the second Wednesday of May each year and is used to identify patterns of pay disparity.
Why Pay Transparency Matters
The purpose of California’s pay transparency laws is to reduce wage disparities and promote fairness in compensation practices across the workplace.Historically, employees—especially women and people of color—have been at a disadvantage when pay information is withheld. With clearer access to compensation data, workers are better positioned to:
- Negotiate fair wages
- Identify pay discrimination
- Understand growth opportunities within a company
Transparency can also foster trust between employers and employees and improve employee retention.
Penalties for Non-Compliance
California’s Labor Commissioner has the authority to investigate and enforce pay transparency violations. Employers that fail to comply may face the following consequences:
- Civil penalties of $100 to $10,000 per violation
- Investigations triggered by employee complaints or audits
- Potential liability in wage discrimination lawsuits
In cases where a job posting omits a salary range, the employer may be required to fix the posting and avoid further violations.
How Job Seekers and Employees Can Use Pay Transparency
For employees and job seekers, pay transparency California laws offer new tools to protect their rights and advocate for fair compensation. Here’s how to take advantage:
1. Review Job Listings Carefully
Pay attention to listed pay ranges when applying for jobs. If the salary range is missing and the employer has 15 or more employees, you may be entitled to request it or report the issue.
2. Ask for Pay Scale Information
If you’re currently employed in California, you can request the pay scale for your own position. Use this information to assess whether your compensation aligns with your duties and experience.
3. Prepare for Negotiations
Armed with accurate salary data, you can enter wage negotiations more confidently and advocate for fair pay based on your role and qualifications.
Tips for Employers
To stay compliant with pay transparency California laws, employers should:
- Establish internal guidelines for setting and adjusting pay scales
- Keep thorough records of employee pay data and job classifications
- Respond promptly to pay scale requests from employees
Proactively implementing these steps can help prevent penalties, reduce legal risk, and support a more equitable workplace culture.
Final Thoughts
The landscape of employment law is shifting, and California is at the forefront of promoting workplace fairness through transparency. The pay transparency California laws require employers to share compensation information in a way that supports wage equity and informed decision-making.
Whether you’re an employee seeking to understand your pay or an employer striving to meet legal requirements, staying informed about these laws is essential. If you have questions about your rights or responsibilities under these regulations, the team at Malk Law Firm can help clarify your position and guide you through your legal options.