Politico: Want to know how much your colleagues make? California might crack open companies’ books

Proposed law would mandate the state to publish pay scales of large companies.

“Hiding the data doesn’t get us anywhere,” said state Sen. Monique Limón, a Santa Barbara Democrat who introduced the bill, in an interview. | Rich Pedroncelli/AP Photo

LOS ANGELES — California could be on the verge of cracking open a closely guarded secret: how much your co-workers make.

A state lawmaker’s proposal would publicize the pay scales at thousands of companies and temp agencies nationwide, requiring large businesses to report breakdowns by gender, race and ethnicity — data the state would then post online.

The swipe at inequities in the private sector is the latest example of progressive Democrats in the world’s fifth-largest economy trying to shape corporate policy, a first-of-its-kind move that could ripple to other blue states. And it comes as a growing number of major companies, including CitiGroup and Intel, have released their internal workforce data.

“It’s very simple: You can’t solve a problem where you can’t see the data,” state Sen. Monique Limón, a Santa Barbara Democrat who introduced the bill, said in an interview. “Hiding the data doesn’t get us anywhere.”

But dozens of industry associations are lobbying business-friendly Democrats to defang or kill the California measure, arguing that the data would be misleading and expose companies to costly litigation, and that it would push some employers to leave the state. Democratic Gov. Gavin Newsom will face immense pressure to side with powerful competing interests — the business and labor lobbies — if the bill reaches his desk next month. Newsom did sign a 2020 pay-disclosure law, but that doesn’t publicly reveal company data.

“We plan to educate the other members of the Legislature and the governor’s office about what our position is and why we think it’s problematic,” said Ashley Hoffman, a policy advocate for the California Chamber of Commerce.

The bill would apply to businesses with 250 or more employees, including about 6,000 in California that employ 6.7 million workers — more than a third of the state’s workforce. But any large company with Californians on staff, regardless of where it is headquartered, would have to share pay data for its workers based in the state.

California has long been on the forefront of the workers’ rights movement. It became the first state to establish a $15 minimum wage, and it pushed corporations to appoint more women and people of color to their boards — an effort that was recently struck down by the courts. Still, white men are far more likely to hold high-paying jobs than everyone else, and are often paid more even when the job title is the same.

The scale of that imbalance is staggering: Data collected by a state agency under California’s 2020 pay-disclosure law revealed that women made $46 billion less than men in comparable positions during 2020, while people of color were paid $61 billion less than white workers for similar jobs.

How each business measured up is hidden from public view, however, as the law keeps company-level information confidential and exempt from public records requests.

Limón’s bill would not only publish the information by company, but also extend the disclosure requirements to temporary staffing agencies, marking the first time the booming sector would be explicitly required to collect and report demographic pay data. Her proposal would also require all but the tiniest of businesses to include salary ranges in job postings — as Colorado and New York City have done — and require employers to start turning over average hourly rates by race, ethnicity and gender.

California has a history of exporting labor laws to other liberal states, and advocates hope Limón’s CA SB 1162 (21R) will lead to broader changes. But first it has to pass.

The California Chamber of Commerce has placed the legislation on its “Job Killers” list, a tag reserved for measures it sees as the biggest threats to businesses. Only six of the 75 bills that earned this designation during Newsom’s first three years in office reached his desk, and he vetoed three of them.

Industry groups say they aren’t willing to budge from their demand that Limón amend the bill to shield company names, a change that would essentially gut it. Limón has called that position a nonstarter.

Such policies force organizations to address salary disparities, said Laura Kray, director of UC Berkeley’s Center for Equity, Gender, and Leadership, who pointed to gender-pay reporting requirements in the United Kingdom and Denmark. In Denmark’s case, the pay gap between men and women shrank by 7 percent, and hiring of women increased by 5 percent at companies required to report pay data, according to a Harvard Business Review study.

“The act of having to justify these numbers — to the extent that gaps arise because of implicit bias or different access to opportunities — forces leaders to attend to it in a way they don’t have to if they don’t report them,” Kray said.

But opponents of the California bill say it would put too much blame on individual companies for pay disparities when broader societal factors, including access to education, are also at play.

Hoffman argued that the pay data published through the bill wouldn’t take those factors into account, and that it groups together jobs with very different salaries under broad categories.

Limón recently agreed to delay the bill’s implementation to 2025 for businesses with 1,000 or more employees, and later for smaller companies. She said that change will give companies more time to explain disparities that appear in their data.

That change wasn’t enough for CalChamber, which has characterized the proposal as a “shaming” strategy and says it will make businesses targets for lawsuits.

“The court of public opinion is a big concern,” Hoffman said. “I know they’ve said there’s room for you to explain the data, but there’s a quote that says, ‘If you’re explaining, you’re already losing.’ Our concern is, what does this data actually show versus how it is going to be portrayed?”

Groups like the American Staffing Association, which represents staffing agencies that place temporary workers at businesses, are also fighting the bill. The group said in a statement that any data collected from these businesses would be misleading because temp workers fulfill different types and lengths of assignments for a variety of clients, leading to different wages.

Worker’s rights groups say a lack of understanding among lawmakers about how staffing agencies operate has allowed a rapidly growing segment of the labor market to avoid scrutiny.

The increasing prevalence of temporary workers has captured headlines in recent years, with a 2019 New York Times investigation revealing that more than half of Google’s workforce was not employed directly by the company. Organizations like the National Employment Law Project, which track temp work data, say these hiring practices are becoming more common across sectors. ASA estimates that California’s temporary work sector is worth around $30 billion annually.

Read full article in Politico

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