Last week, California Gov. Gavin Newsom signed The Pay Transparency for Pay Equity Act into law. The new law, which goes into effect in May of 2023, requires employers with more than 100 workers to disclose annual pay data broken down by demographics. The law also requires employers of any size to provide existing employees with the salary range for their positions. Finally, the law requires employers with more than 15 workers to disclose salary ranges on all job advertisements.
California’s pay transparency law follows similar laws recently adopted in Colorado, Washington and New York City. These laws aim to address pay disparities that most often impact women and minority populations by requiring employers to include salary bands on job descriptions, among other things. With this information, current and prospective employees can determine how much a particular position pays and whether their current pay is fair. Additionally, because in many instances salary information will be publicly available, it will be easier for companies to track the pay of their competitors and for individuals to determine whether the pay being offered is at market.
The trend for jurisdictions to adopt pay transparency laws is a growing one. For example, the New York state legislature passed a salary range posting law, and the governor’s signature is expected in the coming months. Therefore, even if an employer is not in a jurisdiction with a pay transparency law on the books, the employer should be aware of these laws and begin thinking about whether and how to address pay transparency.