As spelled out above, SB 1162 introduces sweeping new pay equity requirements for employers, California-based and beyond.
The state government's goal is four-fold, to:
- Identify pay discrimination
- Analyze pay data and identify wage patterns
- Help prioritize resources for enforcement
- More effectively prosecute employers with pay inequity practices
With the California CRD focused on these four goals and SB 1162 in effect as of January 1, 2023, many, employers may have some catching up to do. Hundreds of thousands of employers are now obligated to have plans in place to determine how they'll comply with this new law. Employers with multiple worksites or that use a lot of labor contractors particularly should not wait.
To start, employers should:
- Establish a metrics and measurement system for tracking progress toward pay equity
- Assess and analyze compensation practices to ensure fair pay ranges before posting salary information in public job listings
- Use pay equity software to monitor pay equity continuously
Not doing these three things opens you up as a target of the CRD.
The best way to comply with SB 1162 is to ensure your pay is set equitably, and not haphazardly, is to perform a pay equity audit.
The information required to be given to the government, according to the text of the law, "shall be made available in a format that allows the department to search and sort the information using readily available software." Trusaic's PayParity software conducts pay equity audits continuously and helps organizations understand their compensation practices before sharing them.
Rather than waiting for a subpoena or discovery request, the time to start implementing a pay-equity audit is now. An audit gives an employer the opportunity to fix problems before they are required to be reported. There are also safe harbors if you do a pay audit and demonstrate progress towards resolving any identified pay disparities. By revealing what the pay data shows, organizations will have the ability to remediate pay discrimination and create more equitable pay practices, ultimately preventing wage discrimination from the get-go.
An important note: Conducting an audit and even finding a discrepancy based on gender or other demographic factors doesn't mean an organization is engaging in discriminatory practices. If, to take just one example, a woman is paid more than a man in a similar role, it may be that she has additional credentials or experience that warrants the differential. Perhaps her role needs to be renamed because of her greater responsibilities. These legitimate business reasons legally explain the difference in compensation between two employees performing similar work.
As mentioned earlier, an audit may also give an employer an opportunity to make some form of its pay data public if it chooses.
After conducting a pay equity audit through PayParity, employers can insert that data into the format required by the CRD.
PayParity Software has a multifold purpose behind just a one-time avoidance of potential legal trouble. Using it means an employer can:
- Analyze all forms of compensation
- Monitor pay equity continuously for change and/or progress
- Establish equitable pay bands and salary ranges for job listings
- Pinpoint pay disparities at the intersection of gender and race/ethnicity (consider multiple variables simultaneously)
- Prevent wage compression (e.g. senior manager making only slightly more than someone more junior due to hot labor market)
- Communicate progress confidently
- Maintain attorney-client privilege
- Comply with SB 1162 and other state laws
Regarding attorney-client privilege, as an employer proceeds with pay-equity compliance, Trusaic can work with the employer's counsel to prevent mandatory disclosure of sensitive information. Unlike consulting firms which may only be covered by a standard non-disclosure agreement, attorney-client privilege minimizes mandatory disclosure risk.
The comprehensive Trusaic PayParity software platform provides what an organization needs to create diversity, equity, and inclusion disclosure reporting that aligns with the Sustainability Accounting Standards Board, Integrated Reporting, and Global Reporting Initiative frameworks.