California Mandates Pay Transparency in Job Ads: Employer Requirements

California's New Pay Transparency Law

California's Senate Bill 1162 mandates that all employers include salary ranges in job advertisements starting January 1, 2026. This new requirement affects businesses with 15 or more employees and aims to promote pay equity and transparency in hiring practices.

Under the new law, employers must disclose the pay scale for a position in any job posting, whether the advertisement is posted directly by the employer or through a third-party job board. The law defines "pay scale" as the salary or hourly wage range that the employer reasonably expects to pay for the position.

Compliance and Recordkeeping

Employers are also required to maintain records of job titles and wage history for each employee throughout their employment and for three years after termination. These records must be available for inspection by the Labor Commissioner to ensure compliance with the law.

Failure to comply with these requirements can result in penalties, including fines and potential legal action. The California Labor Commissioner's Office will enforce the law and has the authority to investigate complaints regarding non-compliance.

Employer Action Items

• Review and Update Job Postings: Employers should immediately begin reviewing their current job postings to ensure compliance with the new pay transparency requirements. This includes coordinating with any third-party job posting services to include the necessary pay scale information.

• Establish Pay Scales: If not already established, employers must develop clear pay scales for each position within their organization. This involves evaluating current compensation practices and making any necessary adjustments to align with the new law.

• Implement Recordkeeping Practices: Employers should set up systems to maintain the required records of job titles and wage history. This may involve updating HR software or recordkeeping processes to ensure accurate and accessible data.

• Train HR and Recruiting Staff: Ensure that HR and recruiting teams are trained on the new requirements and understand how to implement them in daily operations. This includes understanding how to communicate pay scales during the hiring process and maintaining compliance with recordkeeping obligations.

Broader Implications

California's pay transparency law reflects a growing trend toward increased transparency in compensation practices. Similar laws have been enacted in other states, such as Colorado and Washington, suggesting a potential shift in national employment standards. Employers operating in multiple states should consider harmonizing their pay transparency practices across all locations to streamline compliance efforts and promote fairness in compensation.

As the effective date approaches, businesses should take proactive steps to ensure they are ready to comply with these new requirements. By doing so, they not only avoid potential penalties but also contribute to a more equitable and transparent workplace.