In the world of construction, where precision and payroll accuracy are paramount, California’s Pay Transparency Act SB 1162 is shaking up the landscape. This legislation, designed to foster transparency in employee pay, has significant implications for construction companies. As an employer in the construction industry, it’s essential to understand how SB 1162 impacts your ability to hire and retain talent in an already tough environment.

The Need for Pay Transparency

SB 1162, also known as the Pay Transparency Act, went into effect on January 1, 2023. This law aims to eliminate the guesswork surrounding compensation by requiring companies with 15 or more employees to disclose pay ranges (pay scales) in job postings. Furthermore, pay data reporting for 100+ EE employers has now been revised to include mandatory reporting on not only pay data, but also gender, race, and ethnicity by job category. While this may sound straightforward, it’s a pivotal step toward closing wage gaps, particularly among women and minorities in similar roles.

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Key Requirements of SB 1162

To ensure compliance  with SB 1162, construction companies must pay attention to specific key requirements:

Pay Range Disclosure in Job Listings

Job postings for positions within your company, whether they are internal, external, or through third-party platforms, must now include a pay scale. This scale should outline the expected salary or hourly wage for the role, excluding bonuses, benefits, or equity. The best practice (per employment law attorneys) is to include it for any position that could be filled by someone living or working in California or another state that requires it.

Reporting Pay Data

Companies with 100 or more employees, including contractors, must go a step further by reporting mean and median wage data. This information must be submitted annually, adding an extra layer of complexity to your compensation management.

Addressing Remote Workers

SB 1162 doesn’t explicitly address remote work; however, employers must report on any employee working in California or remotely working in another state but reporting to California.

Why You Should Stay in Compliance with the Pay Transparency Act

Embracing the Pay Transparency Act SB 1162 isn’t just about meeting legal requirements; it’s a strategic move that can positively impact your construction company in several ways:

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It Helps Attract Top Talent

In a competitive job market, transparency can make your company more attractive to potential hires. Candidates value organizations that are open about compensation.

The Pay Transparency Act Addresses Wage Disparities

By disclosing pay scales, you’re taking a proactive stance in addressing wage disparities, ultimately fostering a more equitable work environment.

Enhances Employee Trust

Transparency builds trust between employers and employees. When your workforce knows that you value openness, it strengthens the employer-employee relationship.

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The Pay Transparency Act Gives a Competitive Edge

Staying ahead of industry trends and adjusting your policies to align with SB 1162 will keep your construction company competitive in a changing job market.

As an employer in the construction industry, compliance with the SB 1162 in California is essential. Navigating this legislation may seem complex, but by embracing transparency, you can set your construction company on a path to success. However, it’s worth noting that even professional HR and payroll solutions tailored for the construction industry fail to include these crucial pay ranges in their job postings. As a result, keeping salary details hidden can lead to compliance mistakes that are not a walk in the park.

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FAQs for Navigating California’s Pay Transparency Act SB 1162

Does SB 1162 apply to construction companies with remote workers in California or other states?

Yes, while SB 1162 doesn’t explicitly address remote work, companies must report pay data for any employee working in California or remotely in another state but reporting to California.

How does SB 1162 affect prevailing wage and certified payroll in construction?

SB 1162 does not change the requirements for prevailing wage and certified payroll in construction. Prevailing wage is the minimum wage rate that must be paid to workers on public works projects, as determined by the Director of Industrial Relations. Certified payroll is the record of wages and hours that must be submitted by contractors and subcontractors on public works projects, as required by the Labor Commissioner’s Office. SB 1162 adds the requirement to disclose pay scales in job postings and report pay data by gender, race, and ethnicity, but it does not affect the prevailing wage and certified payroll obligations of construction employers.

What are the penalties for non-compliance with Pay Transparency Act?

Non-compliance with SB 1162 can result in civil penalties and legal action from the Civil Rights Department (CRD) or the Department of Fair Employment and Housing (DFEH). The CRD can impose a penalty of $500 per day for each day that an employer fails to submit its pay data report. The DFEH can enforce the pay range disclosure requirement and seek injunctive relief, damages, and attorney’s fees from employers who violate the law.

The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.