Hunton Employment & Labor Perspectives

As we reported in September, effective January 1, 2023, employers face a host of pay disclosure and recordkeeping obligations.  The DLSE, the agency in charge of implementing the new law (codified at California Labor Code section 432.3), recently published guidance on the parameters of the new law.

The law requires employers with 15 or more employees to include a position’s “pay scale” in any job posting for that position.  Section 432.3 defines “pay scale” as “the salary or hourly wage range the employer reasonably expects to pay for a position.”  The new guidance clarifies that any compensation or tangible benefits provided in addition to a salary or hourly wage (such as a bonus, tips or “other benefits”) are not required to be posted; however, if the position’s hourly or salary wage is based on a piece rate or commission, then “the piece rate or commission range the employer reasonably expects to pay for the position must be included in the job posting.”  Finally, the guidance notes that the pay scale must be included in the posting itself and cannot be merely available through a link or QR code.

The new guidance also states that whether an employer is subject to the requirements of the law (e.g., whether it has 15 or more employees) will be interpreted consistent with how the Labor Commissioner counts employees for the purpose of other laws, such as the 2022 COVID-19 Supplemental Paid Sick Leave and minimum wage rates.  Under this interpretation, the Labor Commissions notes that, for an employer whose workforce hovers around the requisite number of employees (here, 15), “a court or the Labor Commissioner likely would focus on the facts during a pay period in which an alleged underpayment occurred.”  Notably, in counting employees, all employees are counted: including exempt, part-time, and non-California employees.  Ultimately, employers are advised to “make a reasonable and good faith determination of the size of their workforce” while recognizing that ambiguities will likely be ruled on in favor of employees.

The new guidance also reminds employers that violations of Labor Code section 432.3 can result in civil penalties of no less than $100 and no more than $10,000 per violation.

Labor Code section 432.3 includes several other obligations that are more fully noted in our original post. 

Guidance: https://www.dir.ca.gov/dlse/california_equal_pay_act.htm (Qs 28-36)

Employers should be cognizant of the effects of these postings. For example, they can be used as evidence in pay claims. Employers should ensure the ranges are appropriate for the skill associated with the posted position and have good documentation to the extent an offer is made outside the provided range in the posting.