How California’s new salary disclosure law could benefit employers

If you’re an employer not already providing salary ranges in your job postings, you have just a few months to make sure you do.

Starting Jan. 1, 2023, under Senate Bill 1162, businesses that employ at least 15 people will be required to include salary ranges in all job postings and provide them to existing employees, if asked.

Gov. Gavin Newsom on Sept. 27 signed SB 1162 into law, drafted by Sen. Monique Limón, D-Santa Barbara, in an effort to push for salary transparency and pay equity for all. Companies with 100 or more employees already must submit this information to the state.

Businesses that don’t comply with the law, which includes reporting employees’ salary, sex, race, ethnicity, hours worked and job category, will face penalties, according to the legislation.

Those penalties allow the state that seek court orders to fine employers for not complying with the law starting at $100 per employee, and up to $200 per employee for a subsequent failure.

Further, the new law permits the California Labor Commissioner to order the employer to pay a civil penalty of no less than $100 per employee and no more than $10,000 per violation.

“It cannot be overstated, with the impending law, now is a good time for employers to do a review of all employee salaries to make sure they are in line with upcoming positions,” said Sarah Grimstead, regional vice president with Houston-based Insperity, a national HR services provider. “Doing the work today and making the appropriate adjustments, if necessary, can prevent many challenges downstream.”

There are upsides to the new law, including for employers who struggle with recruitment in this tight labor market, said one North Bay expert.

For example, employers can see what other companies are offering and adjust their own salaries accordingly.

“So, there's a positive element that, for the first time, you're going to know how much everybody else is paying for a particular position and determine if you need to make any adjustments to be competitive in the market,” said Golbou Ghassemieh, operations manager and senior consultant at The Personnel Perspective, with offices in Santa Rosa and Napa.

Ghassemieh and Grimstead stated the salary transparency law can also help streamline the interviewing and hiring process, or more frankly put, not waste the employer or job seeker’s time.

“When there is a set range, it saves time, fills positions sooner and leads to faster onboarding and engagement,” Grimstead said.

Some employers already list salary ranges in their job postings since it does help speed up the hiring process and attract serious candidates, she said.

But for companies that don’t already do so, the new law may have employees questioning their salaries, she cautioned.

“It is imperative for employers to have a compensation policy they adhere to and documentation about how compensation decisions are made,” Grimstead said. “It is the employer’s responsibility to ensure there are not pay inequities and the employer claiming one employee had better negotiating skills is not a defense in California.”

Overall, Grimstead said, employers welcome the new legislation and feel it can put everyone on an even playing field.

“For small businesses that are unable to compete with the salaries of the large companies in the area, we encourage them to highlight their culture, their access to key decision makers and the other benefits — not just medical, but the ancillary benefits that make for a full, comprehensive benefits program — which make working for a smaller company unique.”

Cheryl Sarfaty covers tourism, hospitality, health care and employment. She previously worked for a Gannett daily newspaper in New Jersey and NJBIZ, the state’s business journal. Cheryl has freelanced for business journals in Sacramento, Silicon Valley, San Francisco and Lehigh Valley, Pennsylvania. She has a bachelor’s degree in journalism from California State University, Northridge. Reach her at cheryl.sarfaty@busjrnl.com or 707-521-4259.

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