California Governor Gavin Newsom has signed into law new legislation that expands upon the 2022 pay transparency law (SB 1162) and the state’s equal pay requirements. These new updates, introduced through SB 642, include an extended statute of limitations and a look-back relief period for equal pay claims, as well as a new definition of “pay scale” for the required pay transparency job postings. SB 642 will take effect at the start of the new year on January 1, 2026.
Since 2022, Employers with 15 or more employees must include an expected pay scale in job postings, as well as provide employees with pay scale information for their current role upon request. Any 3rd parties used for posting jobs must also include the pay scale.
With time providing insight to application, the definition of “pay scale” has been revised to clarify that a good faith attempt means ‘an estimate of this expected wage range that an employer reasonably expects to pay for the position upon hire’. This means the scale should not include what the position would pay after a few years but only a pay scale specific to a wage rate that would be reasonably given upon initial hire. Employers must also not seek salary history or rely on it when determining whether to hire an applicant or determine what salary to offer. However, the law does not prohibit employers from asking about salary expectations or considering salary history information voluntarily disclosed by the applicant.
For recordkeeping purposes, employers must maintain records of job title and wage rate history for each employee for both the duration of their employment, as well as for at least 3 years after the end of their employment. This will be used to better determine if there is a pattern of wage discrepancy.
Violations of the pay transparency requirements, such as failure to post a pay scale, may lead to a civil penalty between $100-$10,000 per violation. The amount will be determined based on the totality of the circumstances.
SB 642 also updated the statutory wording of the state’s equal pay law to reflect that an employer may not pay employees of “another” sex, rather than “opposite” sex, lower wage rates for substantially similar work. This wording was already in place for employees of differing racial and ethnic backgrounds. Exceptions under specified circumstances still exist, such as living in different cost-of-living locales.
This bill also clarified when a ‘cause of action’ occurs under California’s equal pay law. This is either when (a) an alleged unlawful compensation decision or practice is adopted, (b) an individual becomes subject to an alleged unlawful compensation decision or other practice, or (c) when an individual is affected by the application of an unlawful compensation decision or other practice, including each time wages or other compensation is paid.
As of January 1, 2026, the statute of limitations will now be three years after the last discriminatory act occurred. This bill has also provided employees with a large recovery window. Now employees may recover wages “for the entire period of time in which a violation of its provisions exists, but not to exceed 6 years”.
California employers should make sure to stay on top of various government regulations and requirements surrounding their workforce duties. To stay up-to-date with the newest changes, please check our blogs for the most recent news & reach out to your Berkshire account executive for insights into more upcoming legislation. Berkshire can also meet your needs with a market analysis and an update to your pay scales to ensure they are all within a good-faith range. For more information, please contact bai@berkshireassociates.com.