Seyfarth Synopsis: SB 1162, which may soon be signed into law, will require employers to report even more pay data to the California Civil Rights Department (CRD, formerly DFEH), including median and mean pay gap information. But, removed from the bill was a requirement that the CRD post the pay data online.
It’s Almost Game Time!
As we previously blogged, the California Legislature is seeking to up the ante when it comes to pay transparency. SB 1162’s game plan: require more pay data disclosures from employers. Victory? Almost. California’s most recent pay transparency bill looks likely to be signed into law by the Governor’s September 30, 2022 deadline. If it passes, employers will be required to comply with a host of new pay data and pay scale disclosure requirements.
California Moving The Goalposts On Reporting Requirements
Proponents of SB 1162 believe that the current law allows for an end-run around eliminating pay inequities, doesn’t go far enough in its requirements for employers. Through SB 1162, the legislature is playing the long ball and seeking to impose the following changes:
- Within each job category, require that employers report the median and mean hourly rate by each combination of race, ethnicity, and sex. (Existing law requires only numerical counts of employees by race, ethnicity and sex within each job category and pay band.)
- Revise the deadline to submit pay data reports, with the new deadline occurring annually on the second Wednesday of May each year.
- Employers with more than 15 employees would be required to include a pay scale in all job postings (and to provide that information to third parties who post those jobs).
- Note: New amendments to the bill clarify that no penalty would apply for a first violation of this requirement if the employer can show that all job postings for open positions have been updated to include the pay scale.
- All employers, regardless of size, would be required to provide a pay scale for a current employee’s position at the employee’s request—in addition to the requirement in existing law to provide candidates for employment the pay scale for the position the candidate is seeking.
- Employers with multiple establishments would no longer be required to submit a consolidated report, and would continue to be required to submit a report for each establishment.
- Employers that have 100 or more employees hired through labor contractors would have a new obligation to produce data on pay, hours worked, race/ethnicity, and gender information in a separate report.
- Note: A recent amendment to the bill requires that labor contractors “supply all necessary pay data to the private employer,” but does not contain a separate mandate for the labor contractors to collect the “necessary pay data,” nor does it define the data required or address issues with regard to timing of these disclosures. The bill also attempts to hold labor contractors responsible by allowing a court to apportion an “appropriate amount” of any penalties to any labor contractor who failed to provide required pay data to the employer.
Calling An Audible And Removing The Publication Requirement
Initially, SB 1162 would have directed the CRD to publish each employer’s submitted pay reports on a public website. Employers objected to this requirement, and Seyfarth Shaw helped run interference and provided testimony on this issue on behalf of Cal Chamber.
On August 15, 2022, an amendment removed the public disclosure provision and it has now been sidelined. If the bill passes in its current form, the CRD would only be allowed to publish aggregate reports that do not associate pay data with individual employers.
How Does It Get Out Of The Red Zone? What’s Next?
The California Assembly voted to pass the bill on August 29, 2022. The bill returned to the Senate for concurrence on the amendments, which was granted on August 30, 2022. Now it moves forward to Governor Newsom’s desk for possible approval—and his last day to sign or veto bills is September 30, 2022.
If he approves it, the bill, and its pay scale disclosure requirements would be effective beginning January 1, 2023. The updated pay data reports, including mean and median pay gap information, would be due starting May 10, 2023.
Remember: Look Out For The Blitz With Possible Federal EEO-1 Reporting Releases
As a related reminder when it comes to pay transparency, employers both in and out of California that are federal contractors currently may have their consolidated (Type 2) EEO-1 Reports that were filed between 2016-2020 released pursuant to the Freedom of Information Act request from the Center for Investigative Reporting, unless they promptly object to the disclosure. See our alert with more information.
Companies that have historically kept their EEO-1 data confidential may want to consider filing objections to the FOIA request, which would be due no later than September 19, 2022, unless an extension of time is received from the OFCCP. Employers can file objections via an online OFCCP Submitter Notice Response Portal or by email to OFCCPSubmitterResponse@dol.gov. If a company plans to file objections, but needs more time, it should immediately submit a request for an extension to the same email address.
Seyfarth is here to huddle up and assist with helping companies analyze whether they would like to file objections.
Employers should start diagramming their compliance plans for California’s anticipated new pay transparency provisions now, including compiling and reviewing data to identify areas needing attention. The authors and your favorite Seyfarth attorneys are always available to help you get from the line of scrimmage to the end zone.