As previously discussed, the beginning of 2023 brings significant pay disclosure requirements in California and Washington state. Both states recently issued much-anticipated guidance, which further reveals the far-reaching impact to employers who are hiring for remote positions.
In addition, in late 2022, New York became the latest state to pass pay disclosure legislation, which goes into effect later this year.
California Equal Pay Act
In September 2022, California signed into law Senate Bill (SB) 1162, which amended the California Equal Pay Act to impose significant pay disclosure requirements on employers. These requirements went into effect on January 1, 2023.
Among other requirements, SB 1162 requires employers with 15 or more employees to include the pay scale on any job posting. However, the bill did not specify how this 15 employee threshold was determined, whether the law applied to remote positions, or whether employers were required to disclose other benefits on job postings, among other unanswered questions.
Recently, the California Labor Commissioner’s office updated its FAQ on the Equal Pay Act, which shed light on these questions.
- Determining Employee Count: Based on the Labor Commissioner’s interpretation of SB 1162, employers will be subject to the pay disclosure requirements if they have 15 or more employees nationwide, with at least 1 employee in California. Although SB 1162 does not specify how employers should count employees for purposes of the 15 employee threshold, the Labor Commissioner interprets this requirement to be consistent with how employees are counted for purposes of the 2022 COVID-19 Supplemental Sick Leave and minimum wage, as detailed in its previously issued FAQs. Further, the Labor Commissioner states that 1 employee must be currently located in California for the requirements to apply.
- The Labor Commissioner’s guidance can be interpreted to mean that employers would be subject to the pay disclosure requirements as soon as they have 15 or more employees in a pay period, with at least 1 of those employees located in California, for as long as they have a minimum of 15 employees. See Labor Commissioner’s FAQ on the Equal Pay Act #30.
- Remote Positions: The Labor Commissioner interprets SB 1162 to apply to job postings for positions “that may ever be filled in California, either in-person or remotely.” See Labor Commissioner’s FAQ on the Equal Pay Act #29.
- Pay Scale: SB 1162 defines “pay scale” to mean the salary or hourly wage the employer reasonably expects to pay for the position. The Labor Commissioner further clarifies that any compensation or tangible benefits, such as bonuses and tips, do not need to be disclosed (but an employer can choose to do so). However, if the position’s hourly or salary wage is based on a piece rate or commission, then the piece rate or commission range the employer reasonably expects to pay for the position must be included in the job posting. See Labor Commissioner’s FAQ on the Equal Pay Act #32 & #33.
- Method of Pay Scale Disclosure: The pay scale must be included within the job posting. An employer cannot link to the salary range in an electronic posting or include a QR code in a paper posting.
- Retaliation Claims: Among other relief, SB 1162 provides aggrieved individuals the right to file a written complaint with the Labor Commissioner within 1 year of learning of a violation of SB 1162. The Labor Commissioner further clarifies that aggrieved employees may also file a complaint if they are retaliated against for any action taken “to invoke or assist in any manner” with the enforcement of the Equal Pay Act. Employees can file a civil action for retaliation within 1 year of its occurrence and are not required to file a claim with the Labor Commissioner prior to filing an action in court.
For more on SB 1162, see our prior blogs, “ Round Up of Employer Pay Disclosure & Reporting Requirements in 2023,” and “Roundup of New California Employment Legislation”.
In June 2022, Washington state amended its Equal Pay and Opportunities Act to require employers with 15 or more employees to include pay disclosures on job postings. The pay disclosure requirement went into effect on January 1, 2023.
In late November 2022, the Washington Labor & Industries Employment Standards Division (L&I Division) released clarifying guidance on the pay disclosure requirements. Key highlights from that guidance are discussed below.
- Determining Employee Count: The pay disclosure requirements apply to employers with 15 or more employees. The L&I Division guidance clarifies employers will be subject to the requirements if they have 15 or more employees (including employees that do not have a physical presence in Washington), with 1 or more Washington-based employee. The L&I Division will refer to the minimum wage factors to determine if an individual is a Washington-based employee. The requirements apply to all employers who engage in business, industry, profession, or activity in Washington, which includes employers that do not have a physical presence in Washington but engage in business in the state or recruit for jobs that could be filled by a Washington-based employee. See L&I Guidance #3.
- Remote Positions: The pay disclosure requirements apply to postings for remote work that could be performed by a Washington-based employee. Importantly, the L&I Guidance specifically states that an employer cannot avoid disclosing pay information by indicating within a posting that the employer will not accept Washington applicants. See L&I Guidance #3.
- Wage Scale & Benefits: Covered employers must disclose on job postings the wage scale or salary range and a general description of all benefits and other compensation. See L&I Guidance #5.
- Wage Scale or Salary Range: This range should provide an applicant with the employer’s most reasonable and genuinely expected range of compensation. The range provided must extend from the lowest to the highest range established by the employer prior to publishing the job posting. The range cannot include open-ended phrases, such as “$60,000/per year and up.” See L&I Guidance #5.1 for examples of wage scale and salary range disclosures.
- General Description of Benefits: A “general description of benefits” includes, but is not limited to, health care benefits, retirement benefits, any benefits permitting paid days off (including more generous paid sick leave accruals, parental leave, and paid time off or vacation benefits), and any other benefits that must be reported for federal tax purposes, such as fringe benefits. See L&I Guidance #5.2 for additional detail on what information must be included for each category of the above listed benefits.
- General Description of Other Compensation: A “general description of other compensation” includes, but is not limited to, bonuses, commissions, profit sharing, stock options, or other forms of compensation that would be offered in addition to the established range or wage scale.
- Method of Disclosure: On electronic job postings, employers must include a general description of benefits and other compensation but can link to a more detailed description.
The L&I Division Guidance also provides examples of job postings that comply with the new requirements. For more on Washington’s amended Equal Pay and Opportunities Act requirements, see our prior blog, “Round Up of Employer Pay Disclosure & Reporting Requirements in 2023”.
New York State
After New York City passed a Salary Disclosure Law, the New York state legislature passed a similar bill that also requires employers with 4 or more employees to post salary ranges for positions that can or will be performed in the state of New York.
Though the statewide bill was passed by the legislature in June 2022, it was recently signed into law by Governor Kathy Hochul on December 21, 2022. The bill will go into effect on September 17, 2023. The New York City law went into effect last November.
The New York state bill contains similar requirements to the New York City law; however, the statewide law additionally requires the following:
- Commission/Job Description Disclosure: If a position is paid solely on commission, the advertisement must state that compensation will be based on commission. In addition, employers must post a job description, if one exists.
- Recordkeeping: Employers must keep and maintain necessary records to comply with the requirements of the law, including but not limited to, the history of compensation ranges for each job, promotion, or transfer opportunity and the job descriptions for such positions, if such descriptions exist.
Additional clarifying guidance on the New York state law is expected in the coming year. For more on the New York City Salary Disclosure law, see our previous blogs, “Round Up of Employer Pay Disclosure & Reporting Requirements in 2023” and “NYC Issues Guidance on the New Salary Disclosure Law”.
The clarifying guidance should assist employers to comply with the new California and Washington pay disclosure requirements that went into effect this January 1st.
Employers covered by the New York state law should begin preparing to comply with the state-wide pay disclosure requirements later this year. These employers should be on the look out for additional guidance that is expected to be released prior to the September 17, 2023 effective date.
- Round Up of Employer Pay Disclosure & Reporting Requirements in 2023
- NYC Issues Guidance on the New Salary Disclosure Law
- Roundup of New California Employment Legislation
New York State
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