MAY 10TH IS JUST AROUND THE CORNER, ARE YOU READY?
Over the last several years (see last year’s blog, Pay Data Reporting – April 1st Deadline is No Joke), California legislation has focused on pay equity without regard to an individual’s gender, ethnicity, or race and this year was no different. California’s SB 1162 expanded employer obligations in the continuing drive to protect employees from discriminatory pay practices in two distinct ways.
The first component of this new legislation requires private businesses who employ 15 or more employees (with at least one employee located in California) to include the pay scale in every job posting, if the position could be filled by an individual residing in California even if that individual will be working remotely. Employers are also required to provide this information to any current employee who requests it and maintain records of job titles and wage rate history for each employee for the duration of their employment and for three years after employment is terminated. Penalties imposed by CA’s Labor Commissioner to businesses that are found to have violated their obligations run from $100 to $10,000 per violation.
The second component of this new legislation expands on a 2020 law and seeks to tackle pay equity through transparency by placing the onerous burden on private businesses that employ at least 100 individuals (with at least one employee in CA) to collect and report employee pay data to the Civil Rights Department (CRD) by the second Wednesday in May each year. This data must be sorted by establishment, job category, sex, race, and ethnicity and requires employers to calculate the median and mean hourly rate for each demographic group within each job category. Further, private businesses that employ 100 or more individuals leased through labor contractors (“temps”) are required to file an additional separate pay data report and will need to collaborate with their labor contractors in order to do so. This new legislation adds additional civil penalties to employers who fail to submit reports of $100 per employee for the first violation and $200 per employee for subsequent violations.
Ultimately, the purpose of this new legislation is a worthy one: to prevent discrimination and to provide employers the opportunity to identify and correct instances of pay disparity within their own organization. Hopefully, this will occur before the CRD or Labor Commissioner get involved. Further, employers should be advised that the CRD is starting to crack down on employers who fail to file their pay data reports on time: JPMorgan Chase and Michaels Stores received relatively small penalties based on the 2020 law, but the new penalties imposed by SB 1162 could make failure to comply significantly more expensive going forward.
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