On October 8, 2025, California Governor Gavin Newsom signed into law Senate Bill 642 (SB 642) further strengthening California’s wage transparency and pay equity laws. SB 642 amends Labor Code Sections 432.3 and 1197.5, introducing several key changes that took effect on January 1, 2026. While pay scale and pay equity requirements already exist in California, SB 642 clarifies and expands its requirements, which may impact long-term exposure.
Pay Scale Disclosure Requirements
Under SB 642, employers must provide applicants with the good faith expected wage range for the position upon hire. This amendment clarifies that the disclosed pay scale must reflect the compensation the applicant can expect at the time of hire – not at some future point. As a result, employers must conduct appropriate due diligence during the job posting process to ensure the listed range represents a reasonable, good-faith estimate and is not overly broad.
Expanded Pay Equity
SB 642 amends Labor Code Section 1197.5 (a) by replacing the term “opposite sex” with “another sex” thereby broadening the scope of California equal pay protections. This change reflects the Legislature’s continued intent to strengthen pay equity enforcement and ensure protections apply inclusively to all employees.
The law also extends the time period for recovery of wages. Previously, employees could recover wages for violations within two years of the violation. SB 642 establishes a three-year statute of limitations and permits recovery of up to six years of back wages. This expansion significantly increases potential exposure for employers.
Finally, SB 642 revises the definitions of “wages” and “wage rates” to expressly include all forms of compensation. Covered compensation includes salary, overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, allowances (such as cleaning or gasoline allowances), hotel accommodations, reimbursement for travel expenses, and benefits.
Employers should review their pay policies to ensure compliance with SB 642.
