California Amends its Equal Pay and Pay Transparency Laws: What You Need to Know

On October 8, 2025, California adopted SB 642, which amends both California’s equal pay law and its pay transparency law. According to the legislative history, SB 642 “continues efforts to strengthen California’s Equal Pay Act by requiring more transparency in job postings and increasing remedies for violations.” SB 642 Senate Floor Analysis (Sept. 8, 2025) at 6.

The goals of the amendments include:

1. requiring more accurate salary estimates in job postings; and
2. ensuring the value of stock, bonuses and other benefits are factored into equal pay determinations.

Given the amendments take effect January 1, 2026, now is the time for California employers to consider whether they should revise job postings or record-keeping procedures, or otherwise make changes to pay practices to mitigate risk and ensure legal compliance.

Key Changes:

• “Pay scale” now means a good-faith estimate of the salary or hourly wage range the employer reasonably expects to pay when hiring for the role.
• Employers cannot pay employees of “another” sex—not just the “opposite” sex—less for “substantially similar work.” The law clarifies that “sex” is defined the same way as in the Fair Employment and Housing Act (FEHA).
• Employees have a three-year statute of limitations to file a civil action to seek back pay, and they do not need to prove that the employer’s failure to pay was “willful.”
• Employees may recover backpay for up to six years’ worth of violations.
• Clarification around when pay discrimination claims can be filed: a new cause of action accrues each time a worker is affected by an unlawful pay decision or practice—such as each paycheck, benefit, or other compensation tied to that decision.
• “Wages” and “wage rates” (for purposes of the equal pay law only) are defined as including “all forms of pay, including, but not limited to, salary, overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.”

Do I Need to Revise My Job Postings?

Although grouped together in the same bill, the amended definition of “wages” and “wage rates” applies only to Section 1197.5—the equal pay law—and not to Section 432.3—the pay transparency law. At this time, it does not appear that the broader definition of “wages” and “wage rates” in Section 1197.5 will require employers to include details like the estimated value of stock, stock options, vacation pay or travel reimbursements in job postings, but employers should keep an eye on Department of Labor Standards Enforcement (DLSE) guidance to see how that agency intends to interpret the amendment.

In addition, the amendment specifically requires that the posted range be a good faith estimate of the pay range “upon hire.” Employers should review their practices and consult with counsel to determine what range(s) might best comply with the amended California law, as well as any other state or local laws that may apply (for example, laws that govern postings for remote positions that could potentially be filled by applicants from any U.S. state).

What Other Changes Should I Consider?

In practice, many employers already take a “good faith” approach to developing the pay scales for their postings. Employers should continue to be mindful of how they develop pay scales for postings to ensure reasonableness and accuracy—including considering the new “upon hire” requirement.

The explicit addition of “stock” and “stock options” (among other items) to the definition of “wages” adds new layers of complexity to the equal pay law’s requirements. Employers may want to review how they approach privileged proactive pay reviews in light of the amended statutory definition of “wages.”

Our team will keep an eye on how agencies and courts interpret these amendments and their impact on how pay transparency and equal pay claims are pursued and adjudicated going forward.

For questions, please contact the authors (Erin Connell, Katie Mantoan, Necia Hobbes and Simon Cohen) or another Orrick team member.