California Pay Disclosure Law Challenges Employers
California requires salary ranges in job ads starting January 2023.
Why it matters: General Counsels must guide compliance efforts or risk costly lawsuits for their companies.
- Employers with 15+ employees must disclose pay in job listings.
- The law applies to positions based in or remote from California.
- Past salary inquiries are prohibited under this mandate.
- Employers must keep pay records for three years post-employment.
Starting January 1, 2023, a new California law mandates that employers with 15 or more employees must disclose salary ranges in job advertisements. This requirement, part of California Labor Code § 432.3, aims to increase transparency and address wage disparities.
This law applies to positions that can be filled remotely from California and prohibits employers from asking candidates about past salaries, further pivoting from the restrictions laid out in AB 168. Anthony Zaller, an employment attorney, notes the complexity and potential legal risks companies face in ensuring compliance with these sweeping changes.
Employers must also keep records of pay scale information throughout an employee's tenure and for three years after, which anticipates audits under enhanced enforcement measures set for 2026. This heightened scrutiny will require proactive compliance strategies from legal departments to avoid litigation risks.
Given these new obligations, General Counsels should be prepared to implement robust compliance systems. The law not only addresses salary transparency but also fortifies California's commitment to closing gender and ethnicity gaps in compensation.
By the numbers:
- 15 — Minimum number of employees a company must have for the law to apply.
- 2026 — Year when enforcement and definitions will expand and become stricter.
What's next: Additional enforcement provisions and expanded pay scale definitions take effect in 2026.