The California government is increasing efforts to encourage transparency in the labor scene. On Tuesday in Sacramento, California, Gov. Gavin Newsom passed the state’s pay transparency law (S.B. 1162) which would compel employers to open their pay ranges.
Gov. Newsom met with leaders of the Legislative Women’s Caucus to discuss details of legislation that would improve gender equity in the California labor sector. The S.B. 1162 bill sponsored by Senator Monique Limόn (D-Santa Barbara) also addresses race and gender-based estrangement.
The bill would focus on more than 200,000 companies with 15 or more employees within the state from 2023. This makes California the second-largest state in the US, where pay details would have to be disclosed beforehand.
S.B. 1162 isn't entirely new legislation. It builds on a measure the governor signed in 2020, signaling a mandated check into statewide wage disparities. However, the S.B. 1162 bill expands to include more factors such as race, sex, and ethnic differences for contracted workers.
The new law would encourage more American corporations to publish pay data even when it may not be required. This would also combat the problem of inaccurate pay information by sites like Glassdoor or Indeed.com, which often depend on data that employees and employers make to them.
Vice president of strategic initiatives at Syndio, Christine Hendrickson, feels this should be the least on the list of governmental worries.
“There are so many pressures that the law is almost becoming the least of the pressures around transparency,” she said.
Equal Pay for All Women
The bill's primary purpose, which seeks publication of pay data before employees are contracted, would also enforce equal pay for women.
According to information from the US Census, women earn about 83 cents to a man's dollar, while black women earn about 58 cents to a white man's dollar.
First Partner Jennifer Sibel Newsom believes the bill is the right step in the right direction in encouraging true gender equality.
“To achieve a California for ALL WOMEN, we must dismantle the patriarchal systems that have barred women from access to equal pay, secure housing, fair prices on goods, and support services and privacy after a sexual assault,” she said.
The Effects
Companies in California and other parts of the US have valid reasons why they might prefer keeping pay information a secret. Issues such as employee experience and, of course a desire to avoid wage discrimination lawsuits are good reasons.
The California Chamber of Commerce isn't in lieu of the bill and wants the Governor to veto it.
In a letter addressed to the Governor, the group believes that the bill would not only threaten workplace growth but will also impact small businesses negatively.
An excerpt of the letter read thus:
“On top of the financial devastation caused by COVID-19, a staggering 98% of small businesses have said that the labor shortage has negatively affected their financial situations. This bill unfairly penalizes smaller businesses that are unable to compete in the market against larger businesses or those with higher profit margins because disclosing a pay scale is likely to artificially limit an applicant’s interest in a position. Workers are likely then to skip right over their job postings without further consideration of other types of benefits the employer may offer or the type of working environment it offers.”
The new law would also require companies with 100 or more individuals in their employ to release mean and median employee pay by race and gender.