California's New Pay Transparency Law: Pay Data Reporting Obligation Changes for 2023

California recently enacted a landmark pay transparency law that requires employers to disclose pay ranges in job postings, joining a growing number of states and municipalities that impose such requirements aimed at improving pay equity. But beyond the pay scale requirements, Senate Bill (SB) 1162, signed in September 2022 by Governor Gavin Newsom, further broke new ground in expanding pay data reporting processes and requirements for California employers, and thus increasing employers’ compliance burden. Beginning in 2023 for the 2022 reporting year, SB 1162 requires employers to report new demographic and pay data, and imposes new reporting obligations regarding contractor workers. Below is an overview of some of the important reporting obligations for employers under the new law. Reporting Obligations The law requires employers with one hundred or more employees to submit annual pay data reports to the California Civil Rights Department (CRD), which was formerly known as the Department of Fair Employment and Housing (DFEH). The reports must provide “[w]ithin each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate.” This is a major change as it will force employers to provide direct comparison of pay rates between different race/ethnicity and gender
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