California Pay Transparency Law Takes Effect

In recent years, a few states have created laws regarding pay transparency in an effort to reduce discriminatory wage gaps. Colorado was the first to introduce a statewide law in 2019, though it didn’t take effect until 2021. New York City’s law will soon expand to all of New York. A new law just took effect in Washington as well as our own state, California, on January 1st. California’s law requires that companies with at least 15 employees post pay ranges in their job listings, as well as requiring that current employees have access to the pay range for their current position. The penalty for violating this requirement is between $100 and $10,000 per violation. The first violation only gets a warning as long as the information is added. Some companies also don’t currently have pay bands — the new law requires them. Companies with at least 100 employees will need to provide more detailed information.

Unfortunately, the new law may have to contend with some resistance. In New York City, employers chose to display incredibly wide price ranges. This doesn’t help prospective employees at all to figure out how much they would actually be getting. In one extreme example, Citigroup claimed a range of $0-$2 million, though they later said this was a computer glitch and changed it to something more reasonable. In Colorado, employers created remote job openings — with the stipulation that they could not be in Colorado, so the state requirement didn’t apply to that listing. Colorado’s method probably wouldn’t work in California, since California has such a large population that employers would miss out on a huge segment of potential employees. But New York City’s method is actually already in use in California, even without a requirement to list pay ranges at all. This is because prospective employees tend to disregard a listing entirely if there’s no pay range provided.

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