New California law requires companies to post salary ranges in job listings for better transparency

Pay transparency is not a policy that many companies follow in today's world. However, a new California law has come as a relief to many job seekers and those who are underpaid. From now on, most Californian companies have to reveal their pay ranges to jobseekers upfront, reports CBS News. The new law is expected to help reduce the pay gap in the workplace.

The new law, which came into effect on January 1, 2023, aims to reduce gender and racial pay gaps. Companies with 15 or more employees are now required to specify their salary ranges on job postings. This includes all job listings even if they are from third-party sites such as Indeed, LinkedIn and Glassdoor. Kayun Kim, who is currently pursuing MBA and will soon begin her job search, welcomes the new law. She believes that it is great to "know the salary in advance" as it will help her choose the company with the salary range that suits her. However, she asked: "How large of a range will companies be allowed to post?" Responding to the query, Robert Eassa—Chair of Northern California Labor & Employment Department for Duane Morris Law Firm—said: "As long as they truly are paying people within that [posted] pay range. They now have to justify that there is a reason for it."

According to the new law, current employees can also ask for the pay range of their current job position and their employers will have to reveal it. If employers do not add pay ranges to their job postings, people can sue or file a complaint with the California Labor Commissioner’s Office and if found guilty, this could lead to a fine of $100 to $10,000 per violation, reports The Sacramento Bee.

Moreover, from 2023 onwards, private employers with 100 or more employees must submit a pay data report to California's Civil Rights Department. The report must divulge workers’ hourly rates along with the race, ethnicity and gender in each job category. It should reportedly have the "median and mean hourly rate for each combination of race, ethnicity and sex within each job category." The first annual report is due May 2023.

This new move makes California the largest state where job listings will need salary information by law. The state has more than 19 million workers and about 200,000 employers who will have to comply with the new law, including big companies like Apple, Disney, Google and Meta, as reported by CNBC. Before this new law, companies used to reveal the payscale only upon a "reasonable request" by the applicant or the person pursuing employment. 

Washington also has a similar law called Equal Pay and Opportunities Act in which employers with 15 or more employers have to reveal the pay range on any digital or printed advertisements on the organization’s hiring board or on any third-party website. This law is applicable to companies that have at least one Washington-based employee, engage in business in the state or are hiring for jobs that might get filled by a job-seeker from the state.