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New California Law Forces Transparency About Job Salaries

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New California Law Forces Transparency About Job Salaries

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A recently passed California law will force employers to post the salary range for any new job position with the goal of making the workplace more equitable. The law, which Gov. Gavin Newsome signed into place on September 27, 2022, will take effect on January 1, 2023.

According to the law, any company in California with more than 15 employees must publish a salary range on any new job listing they post. Sen. Monique Limón (D-Goleta), who wrote the bill, said that it promises a turning point for communities that are routinely underpaid.

“This is a big moment for California workers, especially women and people of color who have long been impacted by systemic inequities that have left them earning far less than their colleagues,” she said in a statement. “As we continue to build a sustainable economy, we must ensure every worker is paid equitably.” Companies who do not follow this new law could be liable for between $100 to $10,000 per violation.

California Joins Three Other States in Payroll Transparency

Recently, three other states have introduced similar legislation: Washington, Colorado, and Connecticut. Colorado’s went into effect early 2021, and we’ve begun to see a mix of results.

An analysis of federal data revealed that the share of people actively looking for work began to increase after the law went into effect. In comparison to neighboring states without transparency laws, the labor force participation grew in Colorado. Another possible explanation for the rise is the general raise across the country in companies looking to hire more as COVID restrictions fade.

According to Recruitonomics, a site that analyzes data in the labor market, employment rose, but job listings in the area dropped. While this indicates a positive trend for employment numbers, the law also seemingly introduced new obstacles for job seekers. As more and more job listings with salary ranges began to appear, Colorado job seekers soon noticed a new obstacle: they couldn’t apply for these jobs. Several listings were accompanied by the phrase: nobody from Colorado is welcome to apply. National companies would exclude Colorado residents from the hiring pool.

However, as more states enact similar legislation, the discrimination against Colorado employees specifically may lessen.

The Problems of Pay Inequity

How bad is the pay disparity problem between men and women, as well as between employees of different races?

According to one study from Trusaic, which is a software company that helps businesses with gender-based pay discrepancies, found that women in California earned $46 billion less than men in 2020. Additionally, workers of color earned $61 billion less than white workers.

Another study of 6 million workers from the state of California in 2022 found that 64% of top earners were men, and 36% were women, in 2022. The study, which utilized data from more than 6 million workers, also found that Black and Latino workers were overrepresented in low-wage jobs paying $30,679 or less a year, and that Asian and white counterparts often earned more.

The goal of this new law and similar litigation is to give workers more leverage when negotiating pay. A study from the National Women’s Law Center found that greater transparency in salary upfront tended to help women and people of color when they negotiate salaries for new jobs.

Should More States Enact Salary Transparency Laws?

Should more states follow suit and introduce laws that require employers to list the salary range up front? Do these laws help encourage greater turnout in applying for jobs, as well as equity in hiring across race and gender laws? Stay up to date with AskTheLawyers for more information about new laws that affect workers. In the meantime, workers can always explore their legal options with an employment attorney if they feel that their race, gender, or other type of protected class status played a role in the decision to fire, not hire, or demote them. Workers have rights, and they could benefit from asking a labor lawyer about their best course of action.

Photo by Jp Valery on Unsplash

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