California Law SB 642 Raises Bar for Pay Equity
A new California law, SB 642, has increased the legal requirements for employers to demonstrate pay equity. Companies must now proactively document and justify pay decisions based on factors like role, experience, and performance. The law tightens the standards for defending against pay disparity litigation for any company with employees in the state.
- The law expands the definition of "wages" beyond base salary to include all forms of compensation, such as bonuses, stock options, and benefits, when evaluating pay disparities. - Authored by State Senator Monique Limón, SB 642 was signed into law by Governor Gavin Newsom on October 8, 2025, a date recognized as Latina Equal Pay Day. - The statute of limitations for an employee to file a pay discrimination claim has been extended from two years to three, with a look-back period for recovering lost wages of up to six years. - SB 642 requires that the pay scale disclosed in job postings be a "good faith estimate" of the range the employer expects to pay "upon hire," preventing the use of overly broad or misleading salary ranges. - The law updates the term "opposite sex" to "another sex," explicitly extending equal pay protections to non-binary and employees with different gender identities. - This legislation builds upon California's original Equal Pay Act of 1949 and the Fair Pay Act of 2015, which first established the "substantially similar work" standard. - The law will go into effect on January 1, 2026. - In 2024, women in California earned approximately 87 cents for every dollar earned by men, highlighting the ongoing pay gap the legislation seeks to address.
