The 2023 Pay Transparency Act (the “Act”) has recently been refined by Governor Newsom to provide additional protections and clarity for employees.
Previously, the Act required employers to provide a pay scale for a position, but it was unclear how broad that range could be. For example, a pay scale might span from the minimum salary to the highest possible compensation for the role, resulting in vague and unhelpful data for employees (e.g., “pay scale range $72,000–$141,000”).
Starting January 1, 2026, employers must provide a good-faith estimate of the salary or hourly wage range they reasonably expect to pay upon hire, not the full potential range for the position.
Similarly, the definition of “wages” under the Act was previously ambiguous. It could include salary, bonuses, stock, life insurance, PTO, reimbursements and other benefits, or just a subset of those.
As of January 1, 2026, “wages” will be clearly defined to include all forms of pay.
Finally, the statute of limitations (SOL) under the Act was previously two years for non-willful violations and three years for willful ones, leaving room for disputes over intent.
Beginning January 1, 2026, the SOL will be standardized:
- Three years to bring a claim under the Act
- Six years to examine potential violations
- Each paycheck reflecting unequal pay may be treated as a new violation, resetting the clock for the three-year SOL.
How can employers stay transparent and reduce liability? A few practical tips:
- Maintain detailed wage records (including all forms of pay) for three years to support accurate postings
- Retain those same records for six years to defend against potential claims
These records can be kept in a simple format, such as an Excel (.xlsx) file.
[View source.]
