California Law Will Tackle Pay Equity

It has been a long-standing practice that job postings couch vague verbiage of pay “commensurate with experience” at the bottom of the listing. This nod speaks volumes, but to summarize, the essence shouts: we’ll determine what you are worth after we offer you the job. And for decades, we’ve accepted this as normal practice. After all, most folks need the job and the salary. While some have the experience and confidence to benchmark, do their research, and negotiate firmly, many don’t, and this is why we have a persistent issue in pay equity. In fact, we’ve found that employers tend to exploit this practice, which is why historically marginalized groups, including women, are often paid lower for the same duties and responsibilities as their counterparts.

Our workforce has demanded an equity review of this practice. Moreover, as reported by Adobe’s Future Workforce Study, Gen Z won’t apply for jobs where the posting doesn’t include a salary range. If we are to maintain a strong competitive workforce, laws need to hold employers accountable for this transparency.

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In January of 2023, a milestone on the path to workplace equity occurred when the state of California enacted legislation that requires employers to provide pay scale information on job postings. California’s Senate Bill (SB) 1162 was signed into law on Sept. 27, 2022. California has joined Colorado, New York, and Washington state in enacting a pay transparency law.

The law is not solely about transparency, but it is about equity. Equity refers to fairness and justice and means meeting individuals where they are, and allocating resources and opportunities as needed to create equal outcomes for all individuals. SB 1162 is designed with the idea that access to data can help to reduce levels of inequity.

As Emily McKay Johnson says in Three Ways California’s Pay Transparency Bill Will Help Close the Wage Gap for Women and People of Color, “This bill isn’t necessarily about paying employees a certain amount of money—it’s about paying a fair wage for the same work, regardless of an employee’s classification.” The bill also requires employers to provide an applicant with the pay scale for a position and include that pay scale in job postings.

The legislation increases transparency in new ways:

• Employers with 15 or more employees must include the pay scale (hourly wage) for a position in any job posting.
• Employers with 100 or more contract workers hired by a third party must report aggregate pay data broken down by job type, race, gender, and ethnicity. Additionally, companies must include the names of all third-party labor contractors that they utilize.
• Applicants can request the pay scale for the position to which they are applying.
• Employers must maintain records of job titles and wage rate history for each employee up to three years after the end of employment.
• If the law is violated, employers will be ordered by the state to pay a civil penalty between $100 and $10,000 per violation.

Source: Christina Pay Equity/Unsplash

A 2022 report by Temp Worker Justice (TWJ), Temp Workers Demand Good Jobs, said that “[w]hen host employers subcontract work to temporary help and staffing agencies, lowest-bidder dynamics in the contracting process may create a “race to the bottom” that pushes down wages for temp workers.” Worldwide, women only make 77 cents for every dollar earned by men, which cultivates a lifetime of inequality.

According to Tara Jaye Frank, “inequity is rooted in power dynamics and power dynamics exist everywhere. If we want to make real change, we need to make a way forward for others.” One step toward addressing that power dynamic is equal pay. It is vital that we ensure that all workers receive equal pay because all employees have value. Through the sharing of pay data, this new law will help the state chip away at that inequity and move toward equal pay for equal work.