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The Impact of SB 1162 on California's Employment Landscape


As of January 1, 2023, SB 1162 came into effect. As the year comes to a close, we reflect on the changes we’ve experienced as a result of this new bill. Recruiters regularly engage with clients and talent about compensation expectations, and we've witnessed a significant impact since the bill's implementation at the start of the year.

What Is SB 1162?

SB 1162 was signed into law by California Governor Gavin Newsom on September 27, 2022. It mandates that companies with 15 or more employees must post pay ranges on job postings. View the full bill details here.

With the new bill in effect, the public is now aware of competitive pay rates.

This awareness empowers candidates during interviews, providing them with facts to support a request for a higher pay rate. Existing employees also pay attention. For instance, if Jill, earning $100k, sees a nearby competitor offering $150k for her exact role, she can request a pay increase or explore new positions, knowing her market value more confidently.

We’ve noticed that companies are trying to be proactive and stay ahead of the curve, they are conducting local market research to determine their competitive standing. If findings indicate a lack of competitiveness, companies consider adopting a higher salary structure or offer alternative incentives, such as a paid sabbatical. These gestures demonstrate appreciation toward staff without incurring a higher financial burden. Forms of appreciation have proven to be a pivotal factor for top talent in deciding whether to remain with or depart from a company.

Current employees are also aware of their colleagues' salaries and the starting salaries for new hires in their company. If one employee making $100k, sees a counterpart's job description with a starting salary of $130k, a sense of inequality may arise. Companies should be mindful of this when posting new jobs as the public is paying attention. Ensuring transparency and fairness in salary structures is crucial to maintaining employee satisfaction and trust within the organization.

In response to scenarios like these, we've observed companies addressing the situation by providing existing staff with pathways or programs leading to higher management positions. This approach offers the chance to elevate the salaries of current staff, signaling the company's appreciation and value for their contributions. It also allows companies to offer current staff higher salaries, showing appreciation without committing to an immediate increase. Salary adjustments depend on progress and merit, providing flexibility for the company.

Organizations not paying market rate salaries are starting to worry as they explore new methods to retain top talent.Not everyone can afford the high rates of Silicon Valley or Universal Studios, so how do you attract the same quality of talent? Perks.

Perks vary widely and offer smaller companies a chance to stand out. Whether it's generous stock options, a free parking pass, extra PTO days, a flexible hybrid schedule, or a larger bonus package, perks now carry more weight than ever. Candidates might accept lower pay if perks balance the equation for them. For instance, we had a top candidate choose a position with a lower salary because the company allowed her to work from home—an essential benefit for her with young kids. Recognizing and catering to the unique priorities and values of each candidate through perks can be a valuable strategy.

We’ve observed challenges with salary ranges posted on job boards.

For instance, we’ve seen a post for a web designer with a wide pay range of $75k-$200k. Some companies adopt a strategy of consistently keeping a diverse array of roles open, essentially casting a broad net to attract a wide range of applicants and maintain a constant pool of potential talent. However, from a candidate's perspective, such a wide salary range may imply that the company is not entirely committed to making a hire or might be uncertain about the requisite level of experience for the role. Clarity in job postings becomes essential to convey seriousness and enable candidates to gauge their fit for the position accurately.

Another issue with a range provided is that it can be very misleading. When a bonus package is included, it becomes unclear how and where it fits within the given range. Is the top of the range inclusive of the bonus package, or is the bonus an additional component on top of that range? The ambiguity in presenting this information can be misleading for candidates and may result in misunderstandings. Clear communication regarding how bonuses are factored into the salary range is essential to provide transparency and avoid confusion in the negotiation process.

Any ambiguity in salary ranges raises concerns, potentially causing companies to lose out on top applicants if the information is not clear and accurate. Posting a job with a more precisely defined range, as opposed to a broad and vague one, signals the company's seriousness in making hiring decisions and eliminates uncertainty. Clear and transparent communication about salary expectations not only attracts the right candidates but also fosters trust in the hiring process. This approach contributes to a more efficient and effective recruitment process, ensuring that both parties are on the same page from the outset.

New laws come into effect all the time, and Certified is here to assist in navigating them.

Companies struggling to attract top talent choose to partner with staffing firms like Certified because they trust us to provide quality candidates. Our recruiters assist with perks negotiations, helping each party find a happy medium. Recognizing they can’t compete with the big-league players alone, our staffing services provide clients the quality they are looking for.

Candidates searching for new jobs with accurate pay rates also partner with staffing firms. They know our team will place them with companies actively, not passively, searching for candidates.

Certified is here to assist with all your staffing needs in today’s ever-changing market.