For Hiring Teams: What Does the California Pay Transparency Act Mean for Hiring Managers?
Updated: Jan 10
For Hiring Teams:
What Does the California Pay Transparency Act Mean for Hiring Managers?
Sabrina Deltoro, Founder & Recruiting Director
Delson Talent Consulting
January 10, 2023
Existing law in California already states that candidates can request the wage range for the role they’re interviewing for after completing their first interview. The California Pay Transparency Act (CPTA) requires employers to provide certain information about pay and benefits to their current employees upon request. The law went into effect on January 1, 2023, and applies to all employers with offices in California, for companies with more than 15 employees, regardless of where the company is headquartered.
The main purpose of the CPTA is to promote pay transparency and help reduce pay disparities between employees. Under the law, employers are required to provide employees with information about their pay and benefits upon request, including their pay rate, pay scale, and any other monetary benefits or compensation. Employers are also prohibited from retaliating against employees for requesting this information or for discussing their pay with coworkers.
One of the key challenges for companies with offices in multiple states is ensuring compliance with a patchwork of state and local laws that may have different requirements. The CPTA adds to this complexity by requiring employers to provide pay and benefit information to employees in California, even if the company has offices in other states. Currently, laws exist in Colorado, Jersey City, and there are similar laws going into effect soon for the state of Washington and a handful of cities in New York. To comply with the CPTA, you may need to create separate HR policies and procedures for your California operations, or implement a system for tracking and providing the required information to employees in California.
Even if you work at a company that doesn’t have offices in California, if your company doesn’t already have a clear leveling guide with set compensation bands, it should be top of your list to prioritize. It can be a big lift to set up the framework, but doing so as soon as possible sets your team up to not only be compliant with the law, but on par with where the industry standard is headed. Delson Talent can help you understand market rate for different roles in different locations. Ultimately, having pay ranges established will benefit employees and the company by ensuring there are set standards and fair practices. Managers can set expectations with their direct reports about the ranges and timeline, so everyone is on the same page.
SO WHAT IF WE DON’T COMPLY?
So what happens if a company doesn’t take action on the CPTA? If pay and benefit information stays private, and you don’t post ranges on all job descriptions, or a complaint is filed sharing that the information was withheld from a current employee, you could be fined up to $10,000 for noncompliance, or $100 per employee if a violation is found. Employees who feel that they are not being treated fairly or who believe that their pay is not in line with that of their coworkers may be more likely to file complaints or lawsuits alleging discrimination or retaliation. To minimize these risks, seek the guidance of a labor and employment attorney or consult with HR experts who are familiar with the requirements of the law. Post detailed, clear information to a central company intranet or Wiki to avoid inundating your HR team with employee requests. Implement manager compensation training to help foster inclusive, productive conversations, or if you already offer training, send out updated guidance and talking points.
Ultimately, this shift is going to have a ripple effect across the United States, if not the globe. Pay transparency has been shown to level the playing field. Companies that enact pay transparency before legally required to do so have the opportunity to attract, grow and retain value-driven talent, as well as increase diversity amongst their teams. Beyond that, providing equal opportunity and the same information to all candidates is just the right thing to do.
‘What California’s pay transparency law may mean for you” - HR Executive
“California Law Will Require Pay Range in Job Ads” - SHRM
“California's Pay Transparency Law Takes Effect Soon. Here's What to Know” - NBC News