Employers who recruit and employ workers in California should review their job posting and equal pay processes to ensure they comply with new pay transparency requirements, as well as an expanded definition of wages for purposes of equal pay claims. These amendments take effect January 1, 2026.
With respect to pay transparency, the amendments clarify the scope of the pay scale to be included within a job posting. As amended, the law requires an employer to provide a “good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire.” This modification makes clear that the employer only needs to post the pay range applicable to the position for starting-level employees. The employer need not provide the total compensation range for all employees in that position (regardless of tenure). This clarification will make it easier for employers to construct a compliant compensation range for California postings.
On the equal pay front, the amendments significantly expand the definition of “wages” for purposes of California’s Fair Pay Act, clarifying that wages include not just salary, but also “overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.” This amended definition applies only to the Fair Pay Act; it does not extend to other sections of the Labor Code. In particular, the statute makes clear that employers are not required to include these new non-salary components in a job’s posted pay scale for purposes of California’s pay transparency law.
The amendments create potential additional risk for employers, because most employers have focused on salary in assessing pay equity, and therefore have not assessed potential pay inequities outside of salary. To understand and manage the risks associated with this change, employers should conduct a pay equity audit—preferably under privilege—to understand if they have any significant disparities in total pay that may have gone undetected in prior analyses that focused on salary differences only.
It is essential that employers review their job posting practices before the new pay transparency statute becomes effective on January 1, 2026. In addition, they should ensure that when assessing—and potentially remediating for—pay differences, they are now accounting for all aspects of pay.