California Enacts Pay Transparency Law

On September 27, 2022, California became the latest (and largest) state to enact a pay transparency law that requires employers to include pay scales with all job postings. In signing S.B. 1162, which the legislature passed in August, Governor Gavin Newsom joined a nationwide employee-friendly trend towards pay transparency in the hiring process.

Beginning January 1, 2023, all employers who employ at least 15 individuals within California must proactively include a pay scale with all job postings, including postings for part-time positions and postings by third-parties whom employers engage for the hiring process. An employer failing to include the pay scale with a job posting faces a warning for the first violation, then penalties of anywhere from $100 to $10,000 for each subsequent violation.

While it is notable for the most populous state in the country to enact a sweeping pay transparency law, other states and cities already have similar laws in place or have laws that will take effect soon. In January 2021, Colorado kicked off the pay transparency trend, and New York City has a pay transparency law taking effect November 1, 2022. Washington State, like California, will require pay scale disclosures on January 1, 2023. Other states, such as Connecticut, Nevada, and Rhode Island, do not require pay scales with job postings, but do require employers to disclose pay scales during the interview process.

Despite objections from many in the private sector, pay transparency laws continue to rapidly gain momentum nationwide. Employers should not only prepare to comply with the laws in California, Washington, and New York City, but should also expect additional states and cities to enact similar pay transparency laws over the next year.