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Seyfarth Synopsis: SB 1162, which may soon
be signed into law, will require employers to report even more pay
data to the California Civil Rights Department (f/k/a the
Department of Fair Employment and Housing until July 1, 2022),
including median and mean pay gap information. A key contested
provision that would have required the Civil Rights Department to
post the pay data online, however, was recently removed from the
bill.
SB 1162’s mission: require more pay data disclosures from
employers. Accomplished? Almost. California’s most recent pay
transparency bill looks likely to become law before September 30th.
With it, employers will be required to comply with a host of new
pay data disclosure requirements.
One requirement initially included in the bill, however, did not
survive the legislative process. While SB 1162 proposed that the
Civil Rights Department publish employers’ pay data on a public
website, a recent amendment removed that requirement. So what
happens to the granular pay data that employers will report to the
Civil Rights Department? Only the Civil Rights Department will have
access to that information.
Reporting Changes
Proponents of SB 1162 believe that the current law does not do enough to ferret out
pay inequities, and, through SB 1162, seek to impose the following
changes:
- Revise the deadline to submit pay data reports, with the new
deadline occurring annually on the second Wednesday of May each
year. - Within each job category, SB 1162 would require that employers
report the median and mean hourly rate by each combination of race,
ethnicity, and sex. (Existing law, by comparison, requires only
numerical counts of employees by race, ethnicity and sex within
each job category and pay band). - Employers that have 100 or more employees hired through labor
contractors would have a new obligation to produce data on pay,
hours worked, race/ethnicity and gender information in a separate
report. The most recent amendment to the bill requires that labor
contractors “supply all necessary pay data to the private
employer,” but does not contain a separate mandate for the
labor contractors to collect the “necessary pay data,”
nor does it define the data required or address issues with regard
to timing of such disclosures. The bill also attempts to hold labor
contractors responsible by allowing a court to apportion an
“appropriate amount” of any penalties to any labor
contractor who failed to provide required pay data to the employer.
This will be difficult to implement in practice because employers
rarely have access to labor contractors’ pay and demographic
data. The Department also requires that employers certify the
accuracy of pay data reports, which would be practically impossible
to do with respect to labor contractors’ data. - Employers with more than 15 employees would be required to
include a pay scale in all job postings (and to provide that
information to third parties who post those jobs). New amendments
to the bill would clarify that no penalty would apply for a first
violation of this requirement if the employer can show that all job
postings for open positions have been updated to include the pay
scale. - All employers, regardless of size, would be required to provide
a pay scale for a current employee’s position at the
employee’s request—in addition to the requirement in
existing law to provide candidates for employment the pay scale for
the position the candidate is seeking. - Employers with multiple establishments would no longer be
required to submit a consolidated report; rather, employers would
continue to be required to submit a report for each
establishment.
No Publication Requirement
Initially, SB 1162 directed that the Department publish each
employer’s submitted pay reports. The employer community
objected to this requirement and Seyfarth Shaw provided testimony
on this issue on behalf of Cal Chamber.
Shortly thereafter, on August 15, 2022, an amendment removed the
public disclosure provision. If passed in its current form, the
Department would only be allowed to publish “aggregate”
reports that do not associate the pay data with individual
employers.
Looking Ahead
The final California Assembly vote will take place the week of
August 29, 2022, and if the bill passes, it will return to the
Senate for concurrence on the amendments and approval to move to
Governor Newsom’s desk — all of which must happen by August
31. The Governor has until September 30 to approve or veto the
bill. If he approves it, the pay scale disclosure requirements
would be effective beginning January 1, 2023. The updated pay data
reports, including mean and median pay gap information, would be
due starting May 10, 2023.
Workplace Solutions
Employers should begin to plan compliance now, including
compiling and reviewing data to identify areas needing
attention.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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