On October 8, 2025, Governor Newsom signed SB 642 into law, known as the Pay Equity Enforcement Act, which significantly amends California’s Equal Pay and Pay Transparency laws by broadening key definitions, extending the statute of limitations to three years, and specifying categories of unlawful practices under the act. SB 642’s amendments go into effect on January 1, 2026.
Amended Definition of “Pay Scale” Under California’s Pay Transparency Law
California’s Pay Transparency Law, codified under Labor Code section 432.3, requires employers to provide employees with “pay scale” information, and requires employers with 15 or more employees to affirmatively include pay scale information in job postings. Our prior blog post on California’s Pay Transparency Law is here.
Previously, “pay scale’ was defined to include the salary or wage range that the employer expected to pay “for the position” generally. Now, the amended definition requires employers to provide a “good faith estimate” of the salary or wage range “upon hire.” This means employers must now disclose what they reasonably expect to pay a new hire on day one, rather than offering an estimate for the position as a whole.
Amendments to California’s Equal Pay Law
Expanded Definition of “Sex” and “Wages”
California’s Equal Pay Law, codified at Labor Code section 1197.5, prohibits employers from paying employees less wages for performing substantially similar work based on sex. Section 1197.5 previously prohibited employers from paying an employee less than an employee of the “opposite sex.” SB 642 amends the law to prohibit a pay disparity between an employee of “another sex,” now encompassing non-binary genders. This means employees who have different gender identities or gender expressions, whether or not stereotypically associated with the person's assigned sex at birth, must be compensated equally as other genders when performing substantially similar work.
SB 642 also significantly broadens the definition of “wages” to include all forms of pay, including, inter alia, bonuses, stock, stock options, cleaning or gasoline allowances, hotel accommodations, and reimbursement for travel expenses. Employers must now ensure that any form of compensation, not just a salary or hourly rate, is paid equally across genders unless there is a business necessity or other meritorious reason for the disparity. SB 642 makes clear that this expansive definition of wages only applies to section 1197.5 and does not apply to any other section of the Labor Code.
Extended Statute of Limitations
SB 642 extends the time for an employee to bring an Equal Pay Act claim to three years from the date of the alleged violation. An employee may recover for the entire time period that a violation of the act exists; however, this time period may not exceed six years.
Enumerated Categories of Violations
SB 642 provides specific instances of when a violation of the Equal Pay Act occurs, which includes when:
- An alleged unlawful compensation decision or other practice is adopted;
- An individual becomes subject to an alleged unlawful compensation decision or other practice; and
- When an individual is affected by application of an alleged unlawful compensation decision or other practice, including each time wages, benefits, or other compensation is paid.
Given the broad language of these prohibited practices, employers should be sure that their pay policies and practices are updated to align with SB 642’s amendments, including the expanded definition of sex and wages. Specifically, employers should make clear that their policies and practices reflect the fact that all forms of compensation, not just salary and wages, is paid equally amongst genders. This is especially important considering the fact that an employee may recover whenever they are “subject to” an unlawful practice under the act.
Key Takeaways
Covered employers should ensure that all job postings posted on or after January 1, 2026 contain the required pay scale information. Employers should also revise their pay policies and practices to prohibit pay inequity between an employee of another sex, and to ensure that all forms of wages are paid equally across sexes, not just salaries and hourly rates.
