Pay Ranges and Why You Need Them for Every, Single Role
Lesson Last Updated: August 18, 2023
Lesson Highlights
On September 27, 2022, new legislation was signed into law by California Governor Gavin Newsom as a move toward more transparency in the workplace, with the goal of reducing gender and racial pay gaps. Specifically, employers are now required to prepare pay ranges (sometimes called pay scales or pay bands) for each position they hire.
In this lesson, we'll cover the following topics:
- What the law requires;
- Record retention around pay ranges; and
- Penalties for non-compliance.
What the Law Requires
The law requires different things depending on the size of the employer:
- California employers with fifteen (15) or more employees must:
- include the pay range for a position in any and all job postings.
- provide the pay range to any third party that the employer engages to announce, post, publish, or otherwise make known a job posting, and the third party must then include the pay range in the job posting.
- ALL California employers must:
- provide the pay range for a position to an applicant applying for employment, upon request.
- provide the pay range for a position to an employee for the position in which the employee is currently employed, upon request. [1]
To top it off, private employers with 100 or more employees are now required to submit a pay data report to the California Civil Rights Department covering the prior calendar year, which is referred to as the "Reporting Year." This report is due on or before the second Wednesday of May of each year. [2]
Of note: the law that created these requirements is similar to other wage transparency laws in New York and Colorado, but there is no such analogous law at the federal level (for now).
We've included two real life examples of job postings with and without pay ranges at the bottom of this lesson for you to review. Questions? Leave a comment!
Record Retention
All employers (regardless of size) MUST maintain a record of each employee’s job title and wage history during their employment period and for three (3) years after employment ends. This helps the Labor Commissioner to determine if there is still a pattern of wage discrepancy. These records shall be open to inspection by the Labor Commissioner. If the employer fails to keep these records, it creates a rebuttable presumption favoring employee claims, which means it's harder for the employer to argue that they didn't break the law. [1]
Penalties for Non-Compliance
If you haven't been using pay ranges up until this point, don't have a meltdown! Companies that don’t have pay ranges in job postings won’t get penalized for their first violation if they can demonstrate that all job postings for open positions have been updated to include the pay range as required by the law. [1] But make it a point to get into compliance moving forward!
Employees and applicants can file a complaint with the Labor Commissioner’s Office within one (1) year after the date that they learn of any violation, and the Labor Commissioner's Office can issue a penalty of $100 to $10,000 per violation. Additionally, employees and applicants that are affected by a violation of the law may also bring a civil action for injunctive relief (read: a lawsuit) and any other relief that the court deems appropriate. [1]
A good way to comply with this law is to ensure that every job description, either for a new employee or after promotion/raise, and regardless of your size, includes a pay range. Not sure how to create a pay range? Gather information about how you pay each employee or how you plan to pay each job applicant and then reach out to your attorney for help!
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