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What's Inside California's Pay Transparency Law

183:906269490 • October 4, 2022

And how that affects you.

California is once again making waves as it signs into effect a dramatic pay transparency law that takes effect January 1, 2023. As California goes, so goes the nation, as they say. And though it isn’t the first state to pass a law like this, it is likely the most impactful and will have a ripple effect throughout the nation.


If you are an employer anywhere in the country with 100+ employees and at least one employee living in California, this law is going to affect you.


This four-part series is going to address the law, how you should prepare, the pros and cons of pay transparency, and what this means to sales specifically.


So first-things-first, what exactly is in this law and how does it affect California businesses?


Pay Scale Disclosure


If you’re a California employer with 15+ employees, every job posting you make needs to list the pay scale for that job. This applies even when posting through third-party sites and when opening up the job to inter-state applications.


Keeping Records


You’ll need to have up-to-date records and documentation of every employee, job title, and wage rate history up to three years after an employee leaves.


Reporting


The new law makes some changes to California’s existing pay data reporting including changing the due date from March to May and adding some new parameters. Employers of 100+ employees already have to provide sample pay period data and information about each employee’s categories including age, race, gender, ethnicity, hours worked, pay band, and more. The new law requires additional analysis including a breakdown of median and mean pay rates within each category.


Labor Contractors


Private employers of 100+ employees hired through labor contractors must submit a separate report about pay data for those contracted employees including the ownership names of the labor contractors.


They Ask, You Tell


If any employee asks you for pay scale information in the position in which they are employed, you are legally required to give them that information.


Upon Penalty


All of these requirements will be enforced against a penalty that could be as large as $10k for non-compliance.


So how does this affect you?


If you’re an employer in California, and you don’t already have detailed records on your employees and their wage histories, you’re going to need to devote some time and staff to getting those records created. If you don’t already have job titles attached to standardized pay structures, you’ll also need to do this. And your reports will require more detail and analysis than before.


If you’re an employer outside of California, you should see this as a crystal ball foretelling your future. Maybe it won’t come to pass, but the likelihood is that pay transparency will gain traction in your state as well. Now’s the time to prepare.


If you’re an employee in California, be aware that the organization you’re working for will be undergoing some massive changes. Digging into the data of compensation can unearth some difficult truths and create some challenges that will need to be navigated. Know your rights and exercise caution and patience moving forward.


My next post will get into more detail about how employers can prepare records, compensation structures, and more in order to get ready for this new law.


In the meantime, check out my book Starting Simple: Sales Compensation. In it, I lay out the process of developing the compensation structures that sales managers need in order to set themselves up for successful hiring and retention of salespeople.


This compensation structure has application for any manager of employees and will help get you prepared for the changes in pay transparency that are coming.  

By 183:906269490 December 16, 2024
In my first Best Practices post, I talked about the importance of knowing what you can pay for your sales roles before worrying about what the market is saying. In my second post, I covered ways to utilize culture in a sales organization . The following Best Practice in sales compensation involves job content. Job content plays several roles in your compensation plan: 1. It gives your salesperson a guide to what success looks like in their role. 2. It gives you a guide to evaluating the performance of your salesperson. 3. It rationalizes differing levels of variable pay outcomes for varying performance levels. 4. It provides your organization with the structure needed to comply with any reporting, pay transparency, or other regulations. Hopefully, that’s enough to convince you of the importance of taking the time to define your new roles and revisit the definition of your existing roles. Now, here’s how job content actually does those things. Defining the job The first role of job content is to define the who, what, where, when, and how of the function. It can be tempting to borrow a job description from LinkedIn, Glassdoor, etc., with the assumption that the content will be similar enough to fit your needs. However, the way a specific role performs is unique to the organization it’s acting in, which is why it’s important to take the time to define the job from scratch. Here are the questions you should be answering in your job content: What does the person need to do on a daily basis? How does this individual pursue sales, and in what segment or with what type of customer? Where should they focus their time and attention when building a pipeline of deals? Who should they be interfacing with, both internally and externally? When do they engage with customers and/or prospects? What portion of the sales process do they own or support? How do they interface with and influence decision-makers? Now, even though I said to write your job description from scratch, that doesn’t mean this is the time or place to get too creative. Job seekers are going to be searching by job title or category, so it’s essential to stick to the common vernacular regarding industry jargon and expected job titles. Job Description: A Byproduct of Job Content Another positive outcome of creating job content for your roles is that you will have generated much of the information needed for a job description if or when you’re ready to hire. Information such as: Job duties and responsibilities that clarify the type of work and engagement with customers. Qualifications/Requirements that are both minimum and desired. Those include education, knowledge, skills, capabilities, and competencies. Performance measures of the role include items like achieving sales targets, new logo acquisition, development of pipeline, accuracy in forecasting, etc. With all of this information on file, it will not only be easier for you to prepare to hire for the roles you want, but it will also be easier to evaluate existing employees in those roles. Beyond all of that, you’ll be well prepared for competitive market research and establishing your variable pay program. I’ll be posting more best practices on the blog, but if you’re anxious to dive deeper into the subject of sales compensation, you can grab a copy of my book Starting Simple: Sales Compensation and consider working through the companion Workbook to build a sales compensation plan from scratch.
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