California is amending its Equal Pay Act to further clarify key pay transparency aspects and offer course of action guidance.
Governor Gavin Newsom signed Senate Bill (SB) 642 on Oct. 8, 2025 and the changes will take effect Jan. 1, 2026. These changes further strengthen the state’s long-standing pay equity framework and have significant implications for employers operating in the state.
Key Updates Under SB 642
The new law introduces several important clarifications and expansions to California’s Equal Pay Act:
- Revised definition of “pay scale.” Employers must now provide a “good faith estimate of the salary or hourly wage range the employer reasonably expects to pay for the position upon hire.” This clarification aligns with pay transparency requirements in other states and ensures candidates receive clear, reliable information about expected compensation.
- Expanded definition of “wages” and “wage rates.” The law now defines wages more broadly to include “all forms of pay, including but not limited to salary, overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning and gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.” This broader scope underscores California’s intent to ensure equity across all forms of compensation — not just base pay.
- Updated definition of “sex.” The definition now aligns with the broader protections outlined in the Fair Employment and Housing Act (FEHA), reinforcing consistency across California’s anti-discrimination framework.
- Clarified statute of limitations. Employees will now have up to six years to obtain relief under the Equal Pay Act. This mirrors prior precedent but codifies it explicitly in statute, offering additional legal clarity.
- New guidance on cause of action. The law provides updated guidance on what constitutes a cause of action under the Equal Pay Act, giving employers and courts greater direction on how to interpret claims and enforcement standards.
Implications for California Employers
California has long been recognized as a leader in pay equity legislation. SB 642 continues that trajectory by refining and expanding key definitions that affect compliance, recordkeeping, and compensation practices.
Employers should review and update:
- Job postings and internal pay structures to ensure salary ranges meet the updated “good faith estimate” requirement. An example of a pay range that would be considered non-compliant: “$100,000 – $250,000.”
- Pay policies and documentation to confirm that all forms of pay — including non-salary benefits — are analyzed and reported consistently.
- Training for HR and legal teams to understand the broader definitions and their implications for audits, investigations, and litigation.
With these updates, California continues to set the standard for comprehensive pay equity and transparency in the U.S.
How Trusaic Can Help
At Trusaic, we help employers ensure their pay practices meet California’s evolving legal standards through:
- PayParity® conducts true intersectional pay equity analyses across all forms of compensation to identify, explain, and resolve disparities using gender-neutral, legally defensible methods.
- Our Remediation Optimization Spend Agent (R.O.S.A.) works as PayParity’s AI remediation partner to find the most cost-effective way to remedy pay gaps. It can 10X+ your ROI compared to traditional remediation methods.
- Salary Range Finder generate compliant pay ranges based on internal data and market benchmarks to meet “good faith estimate” requirements.
- Regulatory Pay Transparency Reporting™ automates and streamline pay reporting across multiple jurisdictions, including California.
Learn more about how Trusaic helps organizations achieve pay equity compliance in California and beyond by visiting our Global Pay Transparency Center. Schedule a demo if you need assistance complying with California’s Equal Pay Act.