Understanding the California Broad Pay Transparency Law


Senate Bill No. 1162 (SB 1162) was an act to amend Section 12999 of the California Government Code and Section 432.3 of the California Labor Code relating to employment. California Governor Gavin Newsom signed the bill into law this past September, which is effective January 1, 2023. Anybody needing help complying with this new law should contact a San Jose business attorney.

Pay Data Reporting Requirements Under Senate Bill 1162

SB 1162 requires all employers with 100 employees or more (including employees hired through labor contractors) to submit annual pay data reports to the California Civil Rights Department (CRD) beginning next May 10, and every second Wednesday in May annually thereafter.

Federal law requires private employers with 100 or more employees to file annual Employer Information Reports (EEO-1s) with the Equal Employment Opportunity Commission (EEOC). Employers must include data relating to pay and hours worked by establishment, job category, race, sex, and ethnicity.

Under SB 1162, reporting obligations are expanded and require all private employers that have 100 or more employees to provide pay data reports to the CRD, even when they are submitting EEO-1 reports to the EEOC, and expand the number of data categories those employers must report. Pay data reports will be due annually every second Wednesday in May and need to include data covering the prior calendar year.

Reports must include:

  • Number of employees by ethnicity, race, and sex in 10 job categories, including: professionals, first- or mid-level officials and managers, executive or senior-level officials and managers, sales workers, administrative support workers, craft workers, technicians, operatives, laborers and helpers, and service workers.
  • Number of employees by ethnicity, race, and sex whose annual earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics (BLS) survey relating to Occupational Employment Statistics.
  • The median and mean hourly rate within each job category, for each combination of ethnicity, race, and sex.
  • Total number of hours worked by every employee in every pay band during a reporting year.
  • An employer’s North American Industry Classification System (NAICS) code.
  • An employer’s clarifying remarks about the information provided (not required).

Employers that hire 100 or more employees through labor contractors during the prior calendar year also need to submit separate pay data reports to the CRD covering employees which also disclose the ownership names of all labor contractors they used to supply the employees. Labor contractors are defined as individuals or entities that supply, regardless of contract, an employer with workers to perform labor within that employer’s usual course of business.

Pay data reports have to be made in a format allowing the CRD to search and sort information using readily available software.

Should an employer fail to file a pay data report, the CRD may file a court order requiring compliance and recovering costs associated with seeking the order. A court may also impose civil penalties of up to $200 per employee for any subsequent failures to file reports.

Salary Posting Requirements Under Senate Bill 1162

California now joins multiple other jurisdictions in requiring pay ranges in job postings. Employers with 15 or more employees are affected by this law.  The state of Washington has a similar law that goes into effect on January 1, 2023, and Colorado and New York City already have such laws.

Employees harmed by an employer’s noncompliance with the pay disclosure requirements can file California Division of Labor Standards Enforcement (DLSE) complaints within a year of the date they learned of a violation or they can file a civil action for injunctive relief. When the DLSE determines an employer violated the law, the employer could be subject to a civil penalty of up to $10,000 per violation.

The labor commissioner determines the amount of a penalty based on a totality of circumstances, which can include previous violations. No penalty is assessed for a first violation when an employer demonstrates that all job postings for all positions were updated to include the pay scale.

Call Us Today to Speak with a San Jose Business Attorney

If you are struggling to understand California’s broad pay transparency law, know that you are not alone. Structure Law Group, LLP can help you navigate the complexities of newfound requirements and ensure that you are in complete compliance.

Our firm can also represent you when you are facing any issues relating to violations. Call (408) 441-7500 in Silicon Valley, (310) 818-7500 in Los Angeles, or (512) 881-7500 in Austin, or contact us online today to schedule a consultation with our San Jose business attorney.