Pay Equity California (USA)

Basic Summary

California has some of the strongest pay equity and transparency laws in the United States. Key requirements include mandatory salary range disclosure in job postings, a ban on pay history inquiries, comprehensive equal pay protections, and mandatory pay data reporting for large employers.

Key Legislation

California Equal Pay Act (Labor Code § 1197.5)

One of the strongest state equal pay laws, prohibiting wage differentials based on sex for substantially similar work:

Substantially Similar Work: Viewed as a composite of skill, effort, and responsibility, performed under similar working conditions
Bona Fide Factors: Employers may justify pay differences based on:
- Seniority system
- Merit system
- System measuring earnings by quantity or quality of production
- Bona fide factor other than sex (e.g., education, training, experience)—must be:
  - Not based on or derived from sex-based differential
  - Job-related and consistent with business necessity
  - Account for the entire wage differential
Same Establishment Not Required: Comparisons can be made across locations within the state
Employee Protections: Employees cannot be retaliated against for discussing wages

SB 1162 (2023): Pay Transparency and Reporting

Salary Range Disclosure (Labor Code § 432.3)

Effective: January 1, 2023

Employers with 15+ employees must:

Include pay scale in all job postings (internal and external)
Pay scale defined: Salary or hourly wage range the employer reasonably expects to pay
Upon request: Provide pay scale for current position to existing employees
Third-party postings: If using recruiter or other third party, employer must provide pay scale to be included

Penalties: Complaints to Labor Commissioner; civil penalties per violation

Pay Data Reporting (Labor Code § 12999)

Effective: May 2023 (annual thereafter)

Private employers with 100+ employees and at least one employee in California must submit annual pay data report to the Civil Rights Department (CRD):

Required Data:

Number of employees by:
- Race/ethnicity (7 categories)
- Sex (male, female, non-binary)
- Job category (10 EEO-1 categories: executives, managers, professionals, technicians, sales, administrative, craft workers, operatives, laborers, service workers)
- Pay band (defined bands for hourly rates and salaries)
Median and mean hourly rates within each race/ethnicity and sex combination, by job category
Calculated separately for each establishment (California-based employees)

Snapshot Date: Any pay period between October 1 and December 31 (employer chooses, must be consistent year-over-year)

Submission Deadline: Second Wednesday of May each year

Confidentiality: Reports are not public records, used by CRD for enforcement and research

AB 168: Pay History Ban (Labor Code § 432.3)

Effective: January 1, 2018

Employers cannot:

Ask applicants about salary history
Rely on salary history in determining whether to offer employment or what salary to offer

Applicants may:

Voluntarily disclose salary history without prompting
Request to be informed of pay scale for position

Exceptions: Public employee salary information that is publicly available is not prohibited

Fair Pay Act Amendments (§ 1197.5)

California extended equal pay protections beyond sex to include:

Race and ethnicity (added 2015)
Enhanced protections and expanded definitions

Enforcement and Penalties

Labor Commissioner (Division of Labor Standards Enforcement - DLSE)

Investigates wage claims and pay equity complaints
Can assess penalties, order back pay, and liquidated damages

Civil Rights Department (CRD, formerly DFEH)

Enforces discrimination laws including equal pay
Conducts investigations and holds employers accountable
Receives and analyzes pay data reports

Private Right of Action

Employees can sue directly in court:

Statute of limitations: 2-3 years (4 years if willful violation)
Remedies: Back pay, liquidated damages (equal to back pay), interest, attorney's fees, and costs
Class actions: Common in California

Employer Best Practices

Pay Equity Audits

Conduct regular privileged audits:

Analyze pay by gender, race, and ethnicity within job families/levels
Use regression analysis controlling for legitimate factors
Remediate identified disparities proactively

Job Architecture and Pay Scales

Develop clear job leveling and salary range structures
Document compensable factors and pay-setting criteria
Ensure transparency and consistency in pay decisions

Salary History Compliance

Train recruiters and hiring managers on the ban
Remove salary history questions from applications
Prepare pay scale information for job postings and candidate requests

Pay Data Reporting Process

Maintain accurate HRIS data on race, ethnicity, sex, job category, and pay
Establish annual reporting workflow (October-December snapshot, May submission)
Validate data quality before submission

Topics Covered

Pay Transparency Requirements ✅ (Salary ranges in job postings)
Pay History Ban ✅ (Cannot ask about prior salary)
Wage Disclosure Protection ✅ (Employees can discuss pay)
Pay Gap Reporting ✅ (Pay data reports to CRD)
Equal Pay Audits ⚠️ (Not mandated, but highly recommended)
Protected Characteristics ✅ (Sex, race, ethnicity)
Employer Thresholds ✅ (15+ for transparency, 100+ for reporting)
Penalties & Enforcement ✅ (DLSE, CRD, private lawsuits)
Remediation Requirements ✅ (Back pay, liquidated damages)

Compliance Calendar

Date	Action
January 1, annually	Ensure all job postings include pay scale (15+ employees)
October 1 - December 31	Select consistent pay period snapshot for pay data report (100+ employees)
By second Wednesday of May	Submit pay data report to CRD
Ongoing	Respond to employee requests for pay scale information
Ongoing	Conduct internal pay equity monitoring and audits

Resources

California Labor Commissioner: https://www.dir.ca.gov/dlse/
California Civil Rights Department (CRD): https://calcivilrights.ca.gov
Pay Data Reporting Portal: https://paydata.calcivilrights.ca.gov
California Labor Code: https://leginfo.legislature.ca.gov/faces/codes.xhtml
SB 1162 Text: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220SB1162

Comparison with Other States

California's laws are among the most comprehensive, but other states have similar provisions:

New York, Washington, Colorado: Salary range disclosure requirements
Multiple states: Pay history bans (e.g., Massachusetts, Oregon, New Jersey)
Illinois: Pay transparency and equity reporting (similar to California)

Organizations operating in multiple states must comply with the strictest applicable law (often California).

Disclaimer: This guide is for informational purposes only and does not constitute legal advice. Organizations should consult California employment law attorneys for specific compliance guidance.