Tags: Attorneys, Worker's Compensation, Business Law
California's SB 1162 took effect on January 1, 2023 and was introduced to address ongoing concerns about pay equity and wage gaps and by requiring employers to post pay ranges and keep detailed pay data, it gives workers a clearer picture of how jobs are compensated. The California Civil Rights Department (CRD) also uses the reports to identify patterns that may point to pay disparities across industries. For employees, SB 1162 makes it easier to see where they stand and for employers, it sets clearer expectations around how compensation should be shared in job ads.
SB 1162, also known as the California pay transparency law, covers businesses with at least fifteen employees, as long as one of them works in California. The requirement applies even if the job itself isn’t located in the state so any position that could be filled by someone in California, whether in person or remotely, has to include a pay scale in the posting.
California pay transparency law SB 1162, applies when companies use recruiters or job boards, and even if a third party posts the ad, the employer is still responsible for including the pay range. Coverage is based on total company headcount, so once a business has fifteen or more employees with at least one in California, the requirement applies. Employers near that cutoff usually decide it is safer to comply than risk falling outside the law.
Under California’s pay transparency law, a pay scale is the reasonable hourly or salary range an employer should expect to pay for a position in the current job market. If the job pays one fixed rate, that number can be listed instead of a range, and for commission or piece-rate positions, the expected range of those earnings has to appear in the posting. Benefits, tips, and bonuses are not part of the official pay scale, though employers may choose to mention them separately. The pay range also has to appear directly in the job ad, since pointing applicants to a QR code, a link, or another document doesn’t meet the requirements of SB 1162.
SB 1162 also covers employees already on the payroll. A worker can request to see the pay range for their current position, and the employer has to provide it. That requirement applies to every business, even those with fewer than fifteen employees.
For employees, access to the pay scale shows whether their pay matches the range for the position and for employers providing the information creates accountability. Many businesses now keep updated scales available so they can respond quickly to requests, consistent with guidance issued by California labor agencies.
SB 1162 requires employers to keep detailed pay records. For every employee, companies have to maintain job titles and wage history for the length of employment and for three years after the worker leaves.
The Labor Commission can look at records during an audit or after a complaint, so if files are missing, the advantage goes to the employee. Keeping records complete makes the process easier, and it gives the employer better protection if questions come up.
California’s pay transparency law gives the Labor Commissioner authority to enforce compliance, so an employee who finds that a posting is missing a pay scale, or who was denied access to the pay scale for their position, can file a complaint with the Labor Commissioner.
Penalties range from one hundred to ten thousand dollars for each posting that doesn't comply. Higher fines are more likely when an employer repeatedly ignores the requirement to include a pay range. For a first violation of the posting rule, no penalty is assessed if the employer shows that all job postings were updated to include the pay scale.
Because liability applies to every noncompliant ad, even a small number of postings can create serious risk for the employer. Companies that review their job ads regularly and confirm pay ranges appear on every platform lower the chance of expensive penalties.
SB 1162 expanded California’s existing pay data reporting program. Employers with one hundred or more workers still have to file annual reports with the Civil Rights Department, and the law SB 1162 added new details, including separate reporting for labor contractors and additional pay information. The report includes median and mean hourly pay, broken down by job category, race, ethnicity, and sex.
Companies that use labor contractors now submit a separate report for those workers. The change makes sure California’s Civil Rights Department receives pay data not just for regular employees but also for contracted staff.
The deadline for the 2024 reporting year is May 14, 2025. Reports are submitted through the Civil Rights Department’s online portal. Missing the deadline causes penalties, so companies benefit from preparing well in advance and keeping payroll data organized before the filing window opens.
SB 1162 applies to more than just jobs based in California, so if a role could be performed by someone in the state, the job posting has to include a pay scale. That includes remote jobs listed nationally, even when the employer is based elsewhere.
Out-of-state companies can be caught off guard when they assume California rules don’t apply, but if the job is open to candidates living in California, the posting has to follow SB 1162.
Employers that hire nationwide can manage compliance by adopting a uniform standard across all job ads. Listing pay ranges consistently removes the risk of overlooking California applicants and avoids the cost of re-posting ads that don’t comply.
When filing pay data reports under SB 1162, employers have to select a single pay period from the last quarter of the reporting year. That period is known as the snapshot period, and it determines which employees are included in the report. All employees on the payroll during that snapshot period are included, even if they only worked part of the year.
SB 1162 requires companies that use labor contractors to file a separate report for those workers. The client employer has to include every labor contractor employee who performed work within the usual course of business. Contractors are expected to provide the data needed to complete the report, and the Civil Rights Department has made clear that responsibility for filing still rests with the hiring business.
If a labor contractor does not supply the information needed for a pay data report, the client employer should keep a record of the requests made and the contractor’s response. The Civil Rights Department has the authority to enforce this requirement, so documenting the effort to collect data can help show that the hiring business acted in good faith.
Yes, in some cases. Pay data reporting covers employees who work in California or who are assigned to a California establishment, even if the establishment itself is located outside the state. Employers with a mix of California and non-California sites need to review their workforce carefully to make sure all covered employees appear in the report.
SB 1162 requires employers to post the range they reasonably expect to pay for a position. The statute does not set a maximum width, but extremely broad ranges may raise questions about whether they are realistic. Employers are expected to post figures that reflect genuine pay practices for the role, not ranges so wide that they provide little information to applicants.
California’s pay transparency law has changed the way employers post jobs and track pay data. For employees, it creates easier access to information about how positions are compensated. For employers, it makes pay practices part of compliance, with real penalties if the rules are ignored. Staying current with SB 1162 not only avoids fines but also helps companies compete for talent in a market where pay transparency is becoming the norm.