Are companies about to get more transparent?

If you're one of many Californians looking for a job, chances are you've run into some familiar frustrations: unclear pay ranges and benefits. And how do you know if the company is a good employer?

If two Democratic state lawmakers have their way, employers might soon have to disclose a lot more information about pay and internal practices. Both bills, working their way through the California Legislature, face ardent opposition from powerful business groups, who fear the proposed laws could lead to unfair comparisons and expensive lawsuits.

The bills are part of a larger push from states, the federal government and, in some cases, employers themselves to make companies more transparent. The California legislators have two goals: shrink genderand race-based pay gaps, while also increasing the quality of jobs.

Companies in several states — including California — currently must tell workers about a job's pay ranges upon request, while Colorado, Washington and New York City have passed measures in recent years requiring companies to put pay ranges in job postings. Intel has begun publishing data on how it pays its workforce, and an increasing share of the largest companies disclose some data on their racial and ethnic makeup. Meanwhile, the chair of the federal Securities and Exchange Commission is interested in new rules that would make public companies disclose data about how they treat their employees.

As California trudges out of the pandemic and companies try to hire or retain workers, the timing is right for legislation that zeroes in on “what it really means to be a high quality employer,” said Ash Kalra, chair of the Assembly's labor and employment committee and a Democrat from San Jose.

When Jessica Seifert applied to work at Riot Games, a video game company based in Los Angeles, pay range wasn't mentioned in the job description, she said. The company, known for its popular “League of Legends” game, first brought her on as a contractor in 2014 and then hired her full time to onboard new employees, she said. She found out a male peer was making $90,000 per year while she was making $70,000, and she began talking with co-workers about pay. The upshot: Women were often getting paid less for doing similar jobs, she said.

From her vantage point inside Riot, Seifert saw applicants negotiate pay without much information on what to expect. “I think it was a lot of anxiety; I think it was a lot of shooting in the dark,” she said.

Gender- and race-based pay gaps persist across the U.S. In California, the average annual pay for women is $50,313 while men earn $57,457, according to Census Bureau data. Meanwhile, more than a third of Californians were in poverty — with less than $35,600 for a family of four on average — or near it in 2019 according to the Public Policy Institute of California. That year, 80% of poor Californians lived in a family with at least one working adult.

To close pay gaps, reduce working poverty and improve job quality, legislators have turned to the same mechanism: making stuff public. One bill, introduced by Monique Limón, a Democratic state senator from Santa Barbara, would require companies to include pay ranges in job postings and let workers know when promotion opportunities are available. For companies with 250 or more employees, pay data for 10 broad job categories would get published starting in 2026, broken out by race and gender. For larger companies, the publication date is sooner. The bill would also require companies using 100 or more contractors to report pay data for contractors.

The hope is that with more information about potential pay, women will be able to negotiate higher wages, said Jessica Ramey Stender, policy director for Equal Rights Advocates, a bill sponsor.

A second bill, introduced by Assemblymember Kalra, would be a first-in-the-nation measure to make companies with 1,000 or more workers in California annually report a broad swath of data about how they treat employees to the state's labor agency. The data include workforce size, scheduling, pay, internal promotions, benefits, safety, turnover rate, equity, and more. The labor agency would begin posting the information online in 2024.

The eventual aim is to create a certification for employers who treat their workers well, said Betty Yee, California's controller and the bill's sponsor. The certification would come with benefits — maybe tax credits, or a better shot at getting state contracts — as an incentive. The data would also get condensed into an easy-to-understand measure for the public, sort of like nutrition labels on food.