California companies with 15 or more employees will be required to include salary ranges in all job postings, according to a law signed this week by state Governor Gavin Newsom.
It is scheduled to go into effect in May 2023, bringing California in line with U.S. states such as Washington, Colorado and Connecticut, which have passed similar wage transparency laws in recent months.
It builds on earlier legislation signed into law in 2020 that requires companies with more than 100 employees to submit wage data to the state Department of Fair Employment and Housing.
“This is a great moment for California workers, especially women and people of color who have long been affected by systemic inequities that have left them earning far less than their colleagues,” Sen. Monique Limón, the bill’s author, said Tuesday in a statement.
“As we continue to build a sustainable economy, we must ensure that every worker receives an equitable wage,” she added.
Supporters of the new law have pointed to recent studies analyzing the wage data collected and have found widespread gender and racial inequality.
A study by Trusaic, a software company that helps companies address gender-based wage disparities, found that in 2020, women in California earned $46 billion (a similar figure in euros) less than men and that black people earned $61 billion less than their white counterparts.
Another study, released by the state this year, further showed that despite men and women having the same level of employment, men accounted for 64 percent of top earners, while women accounted for 36 percent.
The study, which was based on data from more than 6 million workers, also revealed that Latino and black workers were overrepresented in low-wage jobs paying $30,679 or less per year, while their white and Asian counterparts tended to earn more.
“One of the factors contributing to the wage gap is that wage disparities are often ‘hidden in plain sight’ and worsen when no one actively monitors hiring practices,” the California Employment Lawyers Association has written in support of the bill.
“Thus, employees and, in many cases, employers themselves – especially in larger companies – may not be aware of gender- or race-based wage disparities that exist in their workforce,” they have added.
In 1996, when “Equal Pay Day” was established in the United States, women earned about 74 cents for every dollar a man earned. The gap has narrowed only slightly, with the 2020 census showing that women earned about 83 cents for every dollar.
The new law aims to give workers more leverage when negotiating pay. Lawmakers referred to a study by the National Women’s Law Center that found that when companies disclose wage ranges up front, women and people of color are more willing to negotiate and are more successful in bargaining.
Workers can file a complaint if they believe a company is violating the law. Employers who violate the law can face a civil penalty of between $100 and $10,000 per violation.
The new law also aims to collect more data on employment and wages, expanding the companies that must provide such information to include those with more than 100 workers hired through labor contractors.
Industries that rely heavily on contract labor, such as custodial and maintenance services, often employ high rates of immigrants, low-wage individuals or other workers vulnerable to labor violations, lawmakers on the Senate Labor, Public Employment and Retirement Committee wrote in their analysis of the bill.
“This additional data could be important for anti-discrimination law enforcement and state-specific programs,” the House committee has said.
The California Chamber of Commerce, which opposed the bill along with a wide variety of business groups, protested a portion of an earlier version of the bill that would have given the state the authority to publish a private company’s wage data, which the group said would “target employers” in “cynical and disingenuous manipulation” of the data.