California Pay Transparency Laws and Reporting Requirements

What do California’s pay transparency and reporting laws mean for employers?

Senate Bill 1162 (SB 1162) amends California Government Code section 12999 and California Labor Code section 432.3. It expands pay data reporting and increases pay scale transparency, showing the state’s commitment to leveling up the field of pay, helping close racial and gender pay gaps, and achieving pay equity.

The main piece of legislation is Senate Bill 1162 (SB 1162), which was signed on September 27th, 2022. This bill amended California Government Code section 12999 and California Labor Code section 432.3 to expand preexisting pay data reporting requirements and increase pay scale transparency.

Additional legislation took effect in 2026. Senate Bill 464 amended SB1162 in several key ways. First, it changed the number of job categories in the report from 10 to 23. Second, it enacted stricter penalties for failure to file annual pay reports. Third, it required separate storage of demographic data.

Senate Bill 642 amended the state Labor Code to specify that the pay range required in the job posting must be the pay upon hire and not a future projection. It also defined some terms: “wages” and “wage rates” include all forms of pay, like benefits, overtime, bonuses, stock and stock options, and travel reimbursements. It also replaced “opposite sex” with “another sex” to be more inclusive. Lastly, it expanded the statute of limitations, so that workers can initiate civil action up to three years after a compensation decision.

Key requirements

There are four main components to the current legislation: pay transparency, recordkeeping obligations, annual pay reporting, and contractor pay reporting. We discuss the key requirements below.

1. Pay scale transparency

• Employers with 15 or more employees must include the pay scale upon hire for the position in any job posting. Pay scale is defined as a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position. Pay scale “upon hire” (as defined by SB642) means the expected range when the employee starts the job, not a long-term projection of possible pay.
• If an employer engages a third party to post, publish, or advertise a job posting, the employer must provide the pay scale to the third party to include in the job posting.
• Employers with one or more employees are required to provide the pay scale to applicants and also to current employees, for their current position, upon request.

2. Recordkeeping obligations

• Employers are required to keep records of the job title and wage rate history for each employee for the duration of their employment plus three years after termination. These records must be made available to the Labor Commissioner, who may inspect them for patterns of wage discrepancy. 
• Demographic data must be collected and stored separately from employees’ personnel records (per SB464).

3. Annual pay data reporting 

• All private employers with 100 or more employees must submit an annual pay data report to the California Civil Rights Department. (An EEO-1 containing the same or similar pay data is not sufficient.) As of January 1st, 2027 (for 2026 data), the reports must use 23 job categories aligned with the Bureau of Labor Statistics Standard Occupational Classification (SOC). (Previously, data was required for employees in 10 job categories, aligning with US federal EEO-1 reporting.)
• The report must include the median and mean hourly rate for each combination of race, ethnicity, and sex within each job category. (Under previous law, the report only had to include the number of employees for each combination.)
• Employers with multiple establishments must submit a separate pay data report covering each individual establishment.
• The annual pay report is due on the second Wednesday of May each year for the previous year’s data (i.e., due on Wednesday, May 13th, 2026 for 2025 data).

4. Contractor pay data reporting

• Private employers with 100 or more employees hired through labor contractors within the previous calendar year must submit a separate pay data report covering those workers. 
• Employers must also disclose in the pay data report the ownership names of all labor contractors used to supply employees.
• A labor contractor is defined as “an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.”
• Like the annual pay reports, contractor pay reports are due on the second Wednesday of May each year for the previous year’s data.

What are the enforcement mechanisms in place and the penalties for non-compliance?

Pay transparency and records retention violations:

• Violation of the new pay scale disclosure requirements could result in fines from $100 to $10,000 per violation. 
• There will be no fine for the first violation if the employer updates the job posting to include the pay scale.
• A person aggrieved by a violation can file a written complaint with the Labor Commissioner or file civil action.
• An employer’s failure to keep employees’ records creates a rebuttable presumption in favor of an employee’s claim.

Annual pay reporting and contractor pay reporting violations: 

• Employers who fail to submit the required annual reports may face fines of up to $100 per employee for initial violations and up to $200 per employee for subsequent violations. They may also be held responsible for court costs.

How can PayAnalytics by beqom help employers meet California’s pay transparency and reporting requirements?

PayAnalytics by beqom supports companies all over the world in their pay equity journey, whether they are just getting started or have been conducting pay equity audits for years. It’s a global solution adaptable to all primary regulatory environments, including California SB 1162. With our holistic, scientifically driven pay equity tool, California employers can easily:

Do not hesitate to contact us for further inquiries or to book a software demo.