SB 1162 Won’t Fix Pay Gap

SB 1162 Won’t Fix Pay Gap

It’s summertime, and the living may about to get even easier for plaintiff’s lawyers across California.

Senate Bill 1162, which is wending its way through the legislature, would require the state to publish the pay data of workers by race, ethnicity, and gender for companies with 100 or more employees, including those hired through labor contractors.  In addition, businesses with 15 or more employees must include the pay range for advertised positions.  The bill would also give employees the right to know the pay scale for their current position.

How do lawyers love SB 1162? Let’s count the ways.

In September 2020, California passed the nation’s first state-level pay data reporting law, which required employers to provide the number of employees by race, ethnicity, and gender in ten job categories as classified by the Equal Employment Opportunity Commission (EEOC) and within each of the “pay bands” used by the U.S. Bureau of Labor Statistics Occupational Employment Statistics classifications. The data, which was always intended to be confidential, will now be public if SB 1162 passes.  Even the EEOC explicitly stated that the reports are not useful in showing pay disparities among employees in the same job category.  For example, a category such as “professionals” is so broad that it could mean salary differences that span tens of thousands of dollars.

Notwithstanding, this is the kind of information the lawsuit industry is pining over. “Once the data is made public,” CalChamber warned, “a plaintiff’s attorney would simply have to review the companies with perceived pay disparities and send a settlement demand or threaten litigation.” It’s exactly why Gov. Jerry Brown vetoed a similar bill, AB 1209, in 2017.

SB 1162 further exposes companies and third-party contractors by requiring that they provide pay scales to job applicants. Any employee, even one who was not interested in a job opening, could bring a claim under the Private Attorneys General Act (PAGA), a law that lets plaintiffs sue without the need to show harm.

Introduced by Santa Barbara Senator Monique Limon, Senate Bill 1162 aimed to close the pay gap among women and minorities. “They see jobs and they wonder what the salary range is,” Limon explained. “And that’s what we’re trying to do. We’re trying to say, just offer a salary range so people know what they’re walking into and how to negotiate.”

Posting salary ranges for jobs is actually a bad idea in the current competitive job market. Employers don’t want to be boxed in by publishing pay ranges that could discourage talented applicants from applying.  Moreover, there are excellent websites that publish pay information for thousands of job categories depending on location, level of experience, education, and more.  Applicants already use this data to base their salary demands.  As a manager my advice is to make your case — tell your prospective employer what you think you’re worth.

SB 1162 won’t help close the pay gap among women and minorities, but only encourage lawsuits and divisiveness.  We’ve written about this many times in Right by the Bay — the only way to truly close the pay gap is to do the hard work of improving inner-city public schools so that young people can better prepare for college or have the fundamental skills necessary to enter training programs in high-demand jobs.  If the legislature is serious about closing the pay gap, they should focus on bringing school choice to the state, allowing minorities and low-income families to send their children to the high-performing schools they deserve.  This is their best chance at accessing well-paying jobs.

Rowena Itchon is senior vice president of the Pacific Research Institute.   

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.