Seyfarth Synopsis: On October 8, 2025, Governor Newsom signed into law SB 642, which amends California’s equal pay requirements, including revising the “pay scale” definition, extending the statute of limitations for equal pay claims to three years and permitting recovery for a period up to six years, and defining key terms such as “wages.” On October 13, 2025, Governor Newsom signed SB 464 into law, which significantly revises California employers’ annual pay data reporting obligations. These amendments go into effect January 1, 2026.

SB 642 brings several changes to California equal pay requirements under Labor Code Sections 432.3 and 1197.5 that will require careful review by employers and potential modification to current practices. While California’s Equal Pay Act has been one of the broader equal pay laws in the United States, the amendments to the Act are significant and heighten the risk of potential liability for employers. The amendments are intended to continue to decrease perceived pay inequities and make it easier to seek legal remedies for wage disparities. These revisions are effective January 1, 2026.

In comparison, SB 464 amends Government Code section 12999, which requires employers with 100 or more employees to submit annual pay data reports to California’s Civil Rights Department (CRD). The changes included in this bill address preservation of demographic data, and new reporting categories for the pay data reports.

Modified Definitions for Job Posting Pay Scales and Wages Subject to Equal Pay Act Requirements

SB 642 requires the pay scale on the posting to be the salary or hourly wage range the employer in good faith reasonably expects to pay “upon hire.” This definition may narrow the posted pay scale because the range should be the range the employer expects to pay to the candidate upon hire, instead of a broader range that some employers might have previously provided to cover the full range for the position.

The amendment also confirms that the definition of wages for equal pay claims aligns with federal Equal Pay Act standards and includes all forms of compensation, including benefits such as life insurance, vacation pay, holiday pay, and stock options, and bonuses. These latter categories can make up a significant portion of “wages” in some sectors. Despite this clarification in the equal pay context, there is no requirement for employers to include additional forms of compensation in the posted pay ranges.

Expanded Statute of Limitations

SB 642 extends the statute of limitations for civil actions to recover wages under the Section 1197.5 by one year. The statute of limitations is now three years after the last discriminatory pay act occurred. The amendments permit plaintiff to seek relief for the entire period of time during which a violation exists, but limits potential recovery to a period of up to six years.

The amendments also clarify that nothing prohibits the application of the “continuing violations” or “discovery rule” doctrines. The continuing violations doctrine allows employees to recover lost pay for ongoing discriminatory practices beyond the statute of limitations period by arguing that violations are similar and frequent, and thus should be considered a single act and not barred by the statute of limitations. Similarly, the discovery rule, delays the start of the statute of limitations until the point in time when the plaintiff knew or should have known of the discriminatory pay practice.

California’s Equal Pay Act expands the prohibition against sex discrimination to prohibit paying employees of another sex less for performing substantially similar work. Use of the phrase “another sex” replaces the previous use of “opposite sex” to remove binary gender references and make the language more inclusive.

Clarification of Cause of Action Accrual

SB 642 clarifies that a cause of action arises when any of the following actions occur:  

(1) an alleged unlawful compensation decision or other practice is adopted;

(2) An individual becomes subject to an alleged unlawful compensation decision or other practice; or

(3) When an individual is affected by application of an alleged unlawful compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from the decision or other practice.

Demographic Data Preservation Requirements

SB 464 clarifies that any demographic information gathered by employers or labor contractors for the purpose of submitting pay data reports must be stored separately from personnel records.

The demographic information that is collected for purposes of complying with reporting requirements includes data related to race, ethnicity, or gender.

New Reporting Categories for Pay Data Reports

Beginning with the 2026 reporting cycle (due May 2027), employers will be required to classify employees using 23 job categories from the Standard Occupational Classification (“SOC”) system—up from the 10 EEO-1 job categories used previously. This represents a significant expansion that will require employers to reassess how each job title is categorized for reporting purposes.

In prior years, most employers relied on the EEO-1 job categories used for their federal filings. Going forward, however, employers must align their workforce data with the 23 SOC-based job categories—a framework that may be unfamiliar to many organizations.

The shift introduces additional complexity and workload to a reporting obligation that is already viewed as burdensome, particularly with regard to the labor contractor reporting requirements. To prepare, employers will need to cross-walk legacy EEO-1 assignments to the new SOC categories, resolve edge-case roles that do not fit neatly into any classification, and manage year-over-year comparability issues that may no longer align with other required reports, including the EEO-1. For example, roles previously grouped under the broad “Professionals” category (such as lawyers, scientists, and architects) will now require separate categorization—further increasing administrative effort and the potential for inconsistency across filings.

The new categories apply to both payroll employees and labor contractor employees, which may require coordination with third-party labor contractors to ensure proper classifications are in place.

Mandatory Penalties for Non-Compliance with SB 464

Under the prior iteration of Government Code section 12999, courts were authorized—but not required—to issue penalties. Beginning in 2026, SB 464 requires courts to impose civil penalties against employers that fail to file a pay data report when requested by the CRD.

There is no change to the penalty amounts: up to $100 per employee for the first failure to file, and up to $200 per employee for each subsequent failure. The penalties may be apportioned to any labor contractors that fail to provide necessary pay data to an employer.

Workplace Solutions

Employers should familiarize themselves with the new requirements and definitions in SB 642 and SB 464, which includes ensuring all job posting contain compliant pay scale information, assigning all jobs to one of the 23 new job categories for the 2027 pay reporting cycle, updating reporting templates and data management procedures, and coordinating compliance with labor contractors Consult with the authors of this article or your favorite Seyfarth lawyer for guidance on your equal pay and pay reporting compliance strategies, and check back here at CalPeculiarities for updates on further developments in the equal pay landscape.

Edited by Catherine Feldman