- A new law that went into effect this week requires most California employers to disclose salaries on job listings.
- California's pay transparency law is intended to reduce gender and race pay gaps and help minorities and women compete in the labor market.
- However, the new law doesn't require employers to post total compensation, or a measure of pay that includes equity, stock options, benefits and bonuses in addition to salary.
A new law that went into effect this week requires most California employers to disclose salaries on job listings.
The law affects every company with more than 15 employees looking to fill a job that could be performed from the state of California. It covers hourly and temporary work, all the way up to openings for highly paid technology executives.
That means it's now possible to know the salaries top tech companies pay their workers. For example:
- A program manager in Apple's augmented reality group will receive base pay between $121,000 and $230,000 per year, according to an Apple posting Wednesday.
- A midcareer software engineer at Google Health can expect to make between $126,000 and $190,000 per year.
- A director of software engineering at Meta leading teams building network infrastructure will make at least $253,000 and as much as $327,000 in salary per year.
Notably, these salary listings do not include any bonuses or equity grants, which many tech companies use to attract and retain employees.
California is the latest and biggest of the states and cities that have enacted pay transparency laws, including Colorado and New York City. But more than 20% of Fortune 500 companies are based in California, including leaders in technology and media, and advocates hope that California's new law will be the tipping point that turns posting salary information into standard practice.
In the U.S., there are now 13 cities and states that require employers to share salary information, covering about 1 in 4 workers, according to Payscale, a software firm focusing on salary comparison.
California's pay transparency law is intended to reduce gender and race pay gaps and help minorities and women better compete in the labor market. For example, people can compare their current pay with job listings with the same job title and see if they're being underpaid.
Women earn about 83 cents for every dollar a man earns, according to the U.S. Census.
"You're going to need a lot of different elements in place in order for men and women to get paid the same for the same amount of work and the same experience," said Monique Limón, the California state senator who sponsored the new law. "And one of those is transparency around salary ranges."
But the new disclosures under the law might not tell the whole story of what a job pays. Companies can choose to display wide pay ranges, violating the spirit of the law, and the law doesn't require companies to reveal bonuses or equity compensation.
The law could also penalize ambitious workers who are gunning for more money because of their experience or skills, the California Chamber of Commerce said last year when opposing the bill. Some employers might be wary of posting pay to prevent bidding wars for top talent.
In a comment to CNBC, a Meta spokesperson said, "To ensure fairness and eliminate bias in our compensation systems, we regularly conduct pay equity analysis, and our latest analysis confirms that we continue to have pay equity across genders globally and by race in the US for people in similar jobs." The firm also noted that it generally pays full-time employees in equity as well as cash.
Apple and Google did not immediately respond to requests for comment.
The new law
There are two primary components to California Senate Bill No. 1162, which was passed in September and went into effect Jan. 1.
First is the pay transparency component on job listings, which applies to any company with more than 15 employees if the job could be done in California.
The second part requires companies with more than 100 employees to submit a pay data report to the state of California with detailed salary information broken down by race, sex and job category. Companies have to provide a similar report on the federal level, but California now requires more details.
Employers are required to maintain detailed records of each job title and its wage history, and California's labor commissioner can inspect those records. California can enforce the law through fines and can investigate violations. The reports won't be published publicly under the new law.
Limón said the bill helps narrow pay gaps by giving information to people so they can negotiate their pay better or determine if they are being underpaid for their experience and skills. It will also help the state make sure companies are following existing equal pay laws.
"The reason this is important is that we are not able to address problems that we cannot see," she said.
Limón said she also hopes that the requirement will help California companies recruit the best talent and compete against other states that don't require employers to post salaries.
Pay transparency laws could also spur companies to raise wages after they see that rivals are offering higher salaries. Some companies could even choose to post salary ranges on job listings where it's not required.
Ultimately, she said, helping to ensure women and people of color are getting paid equally will help California's economy.
"The consequence is not just for an individual; there are economic consequences for the state for people being underpaid," Limón said. "That means that their earning power and how they're able to contribute to this economy in California, whether it's through a sales market, a housing market, through investment, is limited, because they are not being paid equitably."
The new law doesn't require employers to post total compensation, meaning that companies can leave out information about stock grants and bonuses, offering an incomplete picture for some highly paid jobs.
For high-paying jobs in the technology industry, equity compensation in the form of restricted stock units can make up a large percentage of an employee's take-home pay. In industries such as finance, bonuses make up a big portion of annual pay.
"Especially for tech employees, ultimately people want to know how much they're getting in total compensation," said Zuhayeer Musa, co-founder of Levels.fyi, a firm focused on recruiting and coaching for technology workers which crowdsources compensation. "Sometimes stock compensation can be more than 50% of your actual total comp."
Musa said stock from big tech companies is basically liquid because it can be immediately sold on the stock market.
The new law also allows companies to provide wide ranges for pay, sometimes ranging over $100,000 or more between the lowest salary and the highest salary for a position. That seemingly violates the spirit of the law, but companies say the ranges are realistic because base pay can vary widely depending on skills, qualifications, experience and location.
Companies may be open to hiring candidates with a range of experience — starting from entry level to a more senior person — for a particular opening, said Lulu Seikaly, senior corporate attorney at Payscale.
Seikaly said she recommends clients post job listings with a specific seniority level to narrow the potential pay range.
"When we talk to customers, and they ask what do you think is a good-faith range, we tell them that's a business decision, but the way we would do it, especially from the legal side, if you post by levels, that's going to cover you a lot more than posting one wide range," Seikaly said.
Some California companies are not listing salaries for jobs clearly intended to be performed in other states, but advocates hope California's new law could spark more salary disclosures around the country. After all, a job listing with an explicit starting salary or range is likely to attract more candidates than one with unclear pay.
"I was telling some folks this morning that pay transparency right now is kind of the exception," Seikaly said. "Give it five to 10 years, I think it'll end up being the norm."