A California bill is poised to significantly increase state-level reporting obligations for companies with employees in that state — which may normalize pay transparency reporting and raise the bar for even non-California companies. A Ogletree Deakins memo summarizes the requirements:
– (for employers with fifteen or more employees) join Colorado, Washington, New York City, and other municipalities in requiring employers to disclose pay scale in job postings;
– add a requirement to provide the pay scale to current employees upon request;
– impose first-of-their-kind (in the United States) requirements for employers with one hundred or more employees to report to the state “within each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate;”
– in a similarly unprecedented move, require employers that retain one hundred or more workers through labor contractors to submit a pay data report covering those workers;
– require employers to submit these pay reports regardless of whether they are required to file an EEO-1 report, and the filing date would be pushed from March to May; and
– maintain a record of each employee’s job title and wage history during employment and for three years thereafter.
The memo highlights the impact how the disclosure will shed light on pay equity, which is a topic that has continued to receive shareholder attention:
Through the mean and median pay reporting requirements, California would be the first jurisdiction to require employers to look at the distribution of employees throughout an organization by demographics. This requirement is not an “apples to apples” analysis of compensation, but rather a metric focused on whether certain demographic groups are represented in the higher paying roles within an organization.
A Seyfarth memo points out that, if signed into law, the bill will not require companies to post the pay data on a public website. Only the California Civil Rights Department will have access to the information. But similar to EEO-1 reports, it’s not a stretch to think that shareholders of public companies will push for the data to be made public, once it’s been prepared.
— Liz Dunshee, CompensationStandards.com, September 8, 2022