California Pay Transparency Law Explained: SB 1162 Requirements for Employers

Are you a California employer looking for clarity on SB 1162? See this guide to the core provisions of the Pay Transparency Law, including practical steps for compliance.

Are you a business owner hiring in California for a remote or in-office role? If so, before beginning the recruitment process, it’s essential to understand California’s Pay Transparency Law, also known as Senate Bill 1162 (SB 1162), and its impact on hiring and compensation decisions.

SB 1162 took effect on January 1, 2023, and was enacted to address long-standing wage disparities in the workplace. By expanding employee access to pay information, the law aims to reduce compensation gaps based on gender, race, age, ethnicity, and other protected classifications, while giving workers more leverage to negotiate fair pay.

Data from the California Civil Rights Department highlights the scale of the compensation issue, showing that pay inequities in the Golden State result in billions of dollars in lost wages each year, particularly for women and employees from historically marginalized racial groups.

To achieve its goal, the California pay transparency law imposes significant compliance obligations on employers. Not meeting these requirements can expose businesses to civil penalties, enforcement actions, and reputational harm.

In this article, we outline the core provisions of SB 1162 and provide practical steps for California employers to stay compliant.

4 Key Employer Requirements Under California’s Pay Transparency Law for 2026

• Salary Disclosure Requirements

Employers with 15 or more employees are required to include the pay scale for a position in any job advertisement published on the company’s website, job boards, or third-party recruiting platforms such as Indeed or LinkedIn.

Under SB 1162, “pay scale” means the hourly wage or salary range an employer reasonably expects to offer for the role at the time of hire, taking into account factors such as experience, qualifications, and other job-related considerations.

This disclosure requirement marks a clear shift from past hiring practices, where employers commonly shared compensation details later in the recruitment process — often after an initial interview or when presenting a formal job offer. By requiring pay scales upfront, SB 1162 gives job seekers a clearer picture of potential earnings early on, allowing them to assess whether a role aligns with their financial expectations before investing time in the application process.

For employers, this transparency can reduce wasted time and hiring costs by discouraging candidates who might otherwise advance through interviews only to withdraw once salary details are revealed.

A quick note: the pay information must appear directly within the job posting itself. Employers cannot satisfy the salary declaration requirement by linking to an external page or using a QR code

At present, California’s pay transparency law doesn’t require employers to disclose benefits, bonuses, commissions, or perks like paid time off in job advertisements. However, some states outside California, including Colorado, do mandate broader compensation disclosures.

Violations of the pay scale disclosure requirement carry significant financial penalties. The California Labor Commissioner may fine employers between $100–$10,000 per violation for failing to include wages in job postings, with higher penalties imposed for repeated offenses.

• Employee Rights to Pay Scale Information

If a female employee, for example, believes her male coworkers earn more for performing the same job, Senate Bill 1162 gives her specific rights. She is entitled to request the salary or hourly wage range for the position she currently holds, and her employer is required to provide this information upon request, even if the company has fewer than 15 employees.

This level of transparency allows employees to verify that they’re being paid fairly compared to colleagues doing substantially similar work and, if discrepancies exist, empowers them to raise concerns or negotiate for equal pay for equal work.

Businesses that refuse to disclose salary details tied to an employee’s job classification may also be subject to penalties ranging from $100 to $10,000 per violation.

• Reporting Pay Data

California’s pay transparency rules require businesses that employ at least 100 workers to submit a pay data report annually to the California Civil Rights Department (CRD).

The report must include detailed workforce information, including the total number of employees, their ages, race, ethnicity, and gender, along with the average and midpoint hourly wages paid within each classification. Through this reporting requirement, SB 1162 aims to create greater visibility into how employees are compensated — making it easier for employers and the CRD to detect, investigate, and address potential wage gaps tied to sex, race, ethnicity, etc.

Employers file their pay data reports electronically through the California Pay Data Reporting Portal, with submissions due by the second Wednesday in May each year. For reports covering the 2025 reporting year, the applicable deadline is May 13, 2026.

Failure to submit a required report on time can prompt the CRD to seek a court order requiring compliance and to assess monetary penalties. 

First-time violations may result in fines of $100 per employee, while subsequent violations carry penalties of $200 per employee. In cases involving serious or repeated noncompliance, total penalties may reach as high as $10,000 per violation.

• Prohibition on Salary History Inquiries

For years, it has been routine during job interviews for HR staff or hiring managers to ask candidates about their current or previous pay.

While applicants may choose to voluntarily disclose their earnings without being prompted, Senate Bill 1162 expressly prohibits employers from requesting salary history or relying on that information when setting pay. 

That said, employers are still allowed to ask applicants about their salary expectations for the position. The objective of the salary history ban is to prevent businesses from using a candidate’s past pay to justify lower wage offers — a practice that has disproportionately affected people of color and women in the workplace.

As a result, employers must now establish compensation based on job-related factors, including an individual’s skills, experience, and the duties and responsibilities of the role.

How to Comply with California’s Pay Transparency Law

Noncompliance with SB 1162 doesn’t only result in statutory fines, which you’ve already seen can add up quickly. In some cases, ignoring California’s pay transparency rules can expose employers to more damaging legal and financial consequences that extend well beyond administrative enforcement.

For example, when pay scale information is disclosed to current employees, it may uncover compensation disparities rooted in sex, race, or ethnicity. If those differences cannot be supported by lawful factors, affected employees may pursue claims under the California Equal Pay Act. These claims allow workers to recover unpaid wages when they receive lower pay than employees of a different sex or race/ethnicity performing similar duties.

California gives workers a generous window to pursue these claims. They have three years to file civil actions alleging violations of the state’s pay transparency requirements.

Additionally, the law permits a six-year “look-back” period, meaning employees may seek relief for pay inequities that existed years before the lawsuit was initiated. If such a lawsuit arises, employers may be responsible for extensive legal fees, back pay awards, and other damages—expenses that can place serious strain on a company’s financial stability.

Reducing these risks requires intentional compliance efforts. Employers should take the following steps to align with Senate Bill 1162 and avoid unnecessary exposure:

• Carefully review all job postings before publication to confirm that required pay scale disclosures are accurate and complete

   

• Implement a streamlined system for responding to employee requests for pay scale information related to their current roles
• Establish pay scales for every position and conduct regular audits to confirm equitable compensation and ensure that any differences are legally justifiable by factors such as experience, education, and performance
• Submit required pay data reports to the California Civil Rights Department within applicable deadlines
• Provide targeted training for human resources personnel, hiring managers, and others involved in compensation decisions so they fully understand SB 1162’s disclosure, interviewing, and pay-related obligations

Call Gallagher Krich, APC, for a Free Consultation

If you operate a California business and still have questions about the state’s pay transparency requirements — or need clearer guidance on how the law applies to you — we encourage you to contact Gallagher Krich, APC.

Our experienced employment law attorneys are prepared to walk you through SB 1162 and other related California employment laws. From reviewing job postings to assisting with compensation data reporting and conducting pay equity audits, we offer clear, actionable advice to help you avoid costly pay transparency compliance missteps.

Schedule a free SB 1162 consultation today by calling (858) 926-5797 or completing our online form to learn how Gallagher Krich, APC, can assist with your compensation transparency and pay equity initiatives.