Knowledge sharing–we keep informed so we can keep you informed. The February newsletter brings you an up-to-date article on new employment related legislation that may impact your company based on the number of employees. You may need to take action and modify current practices to meet the new requirement. We hope you find this helpful as we continue to keep you informed and response ready. 

In This Issue of Our Newsletter:

• Covered Employers

• Pay Scale Disclosures in Job Postings to Employees and Applicants

• Data Required

• Contract Workers

• Market-Based Compensation Analysis

On September 27, 2022, Governor Newsom signed California’s new pay transparency and pay scale disclosure law. The new requirements went into effect on January 1, 2023, with the first pay data reports due to the California Civil Rights Department (formerly the Department of Fair Employment and Housing) by May 10, 2023. California employers of 100 or more employees and/or 100 or more workers hired through labor contractors must report pay and hours-worked data by each organization, job category, sex, race, and ethnicity to the Civil Rights Department (CRD) annually. https://calcivilrights.ca.gov/paydatareporting/

Covered Employers

Previously, only private employers with 100 or more employees were required to submit pay data reports to the Department if they were already required to file an annual EEO-1 Employer Information Report. Employers were also permitted to submit their annual EEO-1 report to satisfy the state’s pay data reporting obligations. Now, all private employers with 100 or more employees will be required to submit pay data reports, without regard to federal EEO-1 reporting status, in a separate report.
Employers with 100 or more total employees, with at least one employee in California, must also include remote employees in the pay data reports if the employees are assigned to a California business, regardless of whether they live in California, or the employees live in California but are assigned to department or location in another state.
In addition, under the new law, employers with multiple locations must submit separate reports for each location the organization operates. Employers will no longer be required to submit a consolidated report that includes all employees across multiple locations.

Pay Scale Disclosures in Job Postings to Employees and Applicants

Upon request, employers are required to provide the pay scale (salary or hourly wage range) to an employee currently working in the position and provide the pay scale for a position to an applicant applying for employment. Additionally, for employers with 15 or more employees, all job postings, including third-party postings, must include the pay scale for the position. An hourly rate can also be given if there is no range.
Employers are required to maintain records of all employees’ job titles and wage rate history for up to three years after termination.

Data Required

Employers’ pay data reports are to be based on a single pay period from October through December of the previous calendar year. The pay data report must break out the number of employees by race, ethnicity, and sex in a series of job categories, and must report the number of employees by race, ethnicity, and sex whose earnings fall within each of the pay bands prescribed in the Bureau of Labor Statistics’ Occupational Employment Statistics survey. There is a new requirement that employers identify the median and mean hourly pay rate for each combination of race, ethnicity, and sex for each job category.

Contract Workers

The new law also requires private employers with over 100 employees to submit a separate pay data report covering contract workers hired through a third party including the ownership names of any labor contractors who supplied workers in the previous year.

Market-Based Compensation Analysis

California law prohibits asking a job applicant for their salary history to determine a position’s salary range. Employers are allowed to ask applicants what their salary expectations are for the position they are applying for or if the applicant’s salary expectations match the range posted in the job announcement.
The best way to prepare your salary strategy is to conduct a market-based compensation analysis based on the job, region, function, relative value, and industry. With insider access to multiple accurate, up-to-the-minute market data systems, Leap Solutions can partner with you to update your pay scales (and job descriptions, job tiers, and job families as needed) and establish a compensation system that will help you meet the new legal requirements.

A market-based compensation analysis will help you:

• Develop salary and hourly pay ranges to address wage transparency regulation
• Evaluate pay in comparison to competitors
• Create benchmarks so that you know the relative value of a position and where your employees fit into that scheme
• Recognize and reward high value contributors by ensuring that they are receiving competitive pay
• Assess internal pay equity to determine if there are historical gender, race, and/or ethnicity disparities
• Gain employee confidence that a fair pay system is used to determine wages
• Forecast salary budget for planning and to ensure that it aligns with the organization’s goals
• Maintain a competitive advantage by using current business intelligence

Are You Ready to Leap?

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Leap Solutions is a diverse group of highly skilled management, organizational development, and human resources, and executive search and recruitment professionals who have spent decades doing what we feel passionate about helping you feel passionate about what you do. Our HR specialists can help you get a handle on the ever-changing COVID-19 guidelines, programs, and legislation that may impact you and your employees. We are available to work with you to develop practical solutions and smart planning decisions for your organization’s immediate, near, and long-term needs.

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