Pay Equity Pay Transparency

Sep 3 2022

Compensation in California Crosses a New Frontier: California’s Pay Transparency

California’s Pay Transparency Law- SB 1162

A Guide For California Businesses

Employer Implications

California’s Pay Transparency Law-SB 1162 is making headway. The state legislature approved the bill on Monday, September 13, 2022. California’s Governor Gavin Newsom has until September 30, 2022, to enact the bill.

This new law would require all employers in California with fifteen or more employees to include the hourly rate or salary range on their job postings. In addition, upon request, employers would be required to provide the pay scale to their staff, and employers would be required to submit data payroll data to the state annually broken down by the demographics of their organization.

Groundbreaking State

The state of California is home to many groundbreaking changes in employment law. California’s Equal Pay Act requires employers in the state to disclose the pay range for positions they’re recruiting for to applicants upon request. In addition, employers within the state with at least one hundred employees are required to submit payroll data to the state annually.

California is now setting a groundbreaking precedent by adding an additional layer of transparency. California would be the first jurisdiction to require employers to distribute payroll data based on the demographics of the organization.

What are the implications of Law-SB 1162?

This new law would require all employers in the state of California with fifteen or more employees to include the hourly rate or salary range within their job postings

Upon request, employers would be required to provide information on what they’re paying their staff members

Employers with one hundred or more staff members would be required to report to the state annually the median and mean hourly rate for each job category broken down by race, ethnicity, and sex

In addition, employers with one hundred or more workers through labor contracts would also be required to submit similar data annually

All employers would be required to record their individual employees’ job title and wage history during employment and for three years post termination

California Fair Pay Act-SB358

The California Fair Pay Act-SB358, originally enacted in 1949, was amended on October 6, 2015, to address pay disparity among men and women within the workplace. The amendment requires employers only to rely on relevant factors to determine pay differences for their staff who perform substantially similar work. Such relevant factors include seniority, merit, quantity or quality of production, or a bona fide factor such as education or experience.

SB358 was also amended to protect employees who wish to discuss their pay with their coworkers openly, and it prohibits employers from retaliating against their staff for doing so.

Employer Liability

SB 1162-Failure to file the required reports or disclose the required information to the state of California would bring penalties to employers for non-compliance. In addition, employees would be eligible to file a complaint with the labor commission, which could lead to further fines and violations.

SB358-The division of labor standards enforcement enforces penalties for employers who violate SB358. Employers would be subject to back pay, interest, and liquidated damages.

To eliminate liability, employers are encouraged to document pay decisions within company policies and job descriptions based on relevant job factors, including job requirements, responsibilities, and working conditions.

Other Transparency Trends

Salary is an important factor for job seekers and, at times, can be a make-or-break decision whether to apply. Organizations are starting to recognize this, and the number of job listings with salary information has been increasing.

Some major companies like Microsoft plan to start disclosing pay on all their job listings more than mandated requirements to recruit qualified candidates.

In addition, to meet job seekers’ needs, popular job listing websites like Indeed recognize this trend and have acted. Indeed encourages employees to post their salary, and if not provided, they utilize an algorithm to atomically pull salary information based upon the job description and the characteristics.

Tools and Resources

Blue Whale has assembled articles and white papers to help companies best manage and guide their compensation program. In addition, at no cost, Blue Whale offers reviews that can help your organization best manage the challenges the pay transparency brings to the employer community.

Let’s Start the Conversation

Blue Whale offers a full range of compensation services to help you achieve your business goals. Whether you’re looking to design a new compensation plan, analyze your current program, or stay up-to-date with the latest trends, we have the expertise and resources to meet your needs. Contact us to learn more about our compensation services and how we can help you take your program to the next level. Let’s start the conversation!

Admin 0 Comments

May 16 2022

Pay Transparency Trends (Legal and Social)

New Rules on How Employers Manage Their Compensation Program

As employees begin questioning their pay, while pay transparency continues to grow in popularity, employers are scrambling to defend their pay practices.

Salary information is becoming more available formally, through legislation, and informally, through social media posts. Employees now have the valuable information to leverage conversations with their managers and challenge current compensation.

States are beginning to require the publication of salary ranges for all classifications. Some examples of the trends in the legislation include:

CA Equal Pay Act – Employers cannot ask about the previous salary and must disclose pay ranges if asked during an interview
CO Equal Pay for Equal Work – Employers must include salary ranges and benefits information in every job posting as well as disclose promotion opportunities and keep track of job descriptions
NY – Employers must post maximums and minimums on all job postings or promotions by November 2022 (extended from May 15th)

More casually, there is a societal shift to make salary information less taboo. Coworkers are no longer ashamed of sharing how much they make in the company. A poll conducted in 2022 by YouGov Plc found that of their sample of 2,500 adults, 42% of Gen Z workers, ages 18-25, and 40% of millennial employees, ages 26-41, have shared their salary information with a coworker or other professional contact.

Many companies are not prepared to discuss the warrants for current salary ranges and are left with unhappy employees who still have pay concerns. Payscale has reported that employees are 50% more likely to leave if they think they are being paid below market, even if they aren’t. Some 57% of people paid at the standard market level believe they are underpaid, and 42% of those paid above the market think they are underpaid. This highlights the value of a compensation study where you can provide employees the ease of mind that they are being compensated based on their talent and skills in a competitive organization.

Admin 0 Comments

Apr 11 2022

Latest News in Pay Transparency and Minimum Wage Increases

Pay Transparency and Minimum Wage Increases: Are You Prepare to Meet the New Challenges?

If You Post A Job, You Must Post A Salary Scale

Starting in May and following a national trend in other major U.S. cities, New York City’s employers will be required to post salary ranges in their job postings. The law exempts temporary staffing firms as they provide this information to potential candidates. The legislation, meant to help correct pay inequities and discrimination, will make it unlawful not to include in job listings the minimum and maximum salary offered for any job in New York City. The range for the listed maximum and minimum salary would extend from the lowest to the highest salary that the employer, in good faith, believes it would pay for the advertised job, promotion, or transfer. Other municipalities are likely to follow as the law is a more significant trend toward pay transparency.

View a List of Cities Requiring Posting Salary Ranges

Pay Equity Efforts in the Public Sector Suffers a Setback

In a setback to proponents of workforce progressive policies, a law requiring board quotas from publicly traded companies with HQs in CA was declared unconstitutional. The law, Assembly Bill 979, signed in 2020 by Gov. Gavin Newson, set forth to increase boards’ composition by requiring publicly traded companies to have board members from underrepresented communities, including people of several races and ethnic groups and people who identify as gay, lesbian, bisexual or transgender. Proponents of the law argued that adding underrepresented groups to the board would aid racial and justice equality in the workplace. However, Judicial Watch, a D.C. nonprofit conservative advocacy group, filed a lawsuit in 2020, arguing the law’s racial, ethnic, sexual preference and gender-based quotas violated the state’s constitution’s equal protection clause. In response, Los Angeles County Superior Court Judge Terry Green ruled that the law violated the state constitution.

Learn More About our Pay Equity Services

Gender Pay Equity – Trending in the Wrong Direction

An initial analysis of proxy compensation disclosure by Equilar, a firm specializing in data-driven solutions for business development, board recruiting, and executive compensation, suggests that gender pay gaps increased in 2021, and in doing so, the gains recorded in 2019 and 2020 have essentially disappeared. According to an initial review of proxy statements relative to 2021, the median pay for women CEOs in the Equilar 500 was $11.8 million, or 18% lower than the median $14.5 million awarded to men. The initial figures seem to follow a two-year compensation difference between men and women. In reviewing past proxy information by gender, data suggests that the average pay for women went from $12.2 million in 2019 to $11.8. The average compensation for men has moved from $12.2 to $14.5 million for the exact period. Even though public and private companies work to adopt pay equity policies, the conversation around gender equity will likely grow louder. Also, this may activate boards and regulatory agencies for measures to minimize the gains achieved in the last few years.

Minimum Wage To Increase, Again, In Parts of Los Angles County

In time for most companies’ budgeting season, companies in the unincorporated part of Los Angeles County and the City of Los Angeles will need to manage another new round of increases to their minimum wage scale. The minimum wage in unincorporated LA County will be increasing from $15.00 to $15.96 per hour on July 1, 2022. The ordinance applies to employees who work at least two hours a week within unincorporated areas of Los Angeles County. The minimum wage in the City of Los Angeles will increase from $15 to $16.04. The wage scalation index, tied to consumer prices, and part of the City’s effort to curb poverty, has spiked considerably over the last few months, pushing the City to boost hourly rates above those in the County. This latest increase is a continuation of the annual increases that began in 2016 and now apply to all employers regardless of employee count. The minimum wage will continue to increase each year on July 1 based on the Consumer Price Index for Urban Wage Earners and Clerical Workers.

Learn more

March 14, 2022

Admin 0 Comments