Among the nearly 800 laws signed by Governor Newsom in 2025, Senate Bill 642 passed with little fanfare.  This may be because SB 642 seems, at first glance, to be clerical in nature.  However, California employers should not be lulled by this characterization as the statute is anything but routine.  SB 642 is a significant expansion of law which should prompt employers to thoroughly review their compensation practices.

SB 642 begins simply enough by revising the definition of “pay scale”.  Labor Code section 432.5 already requires employers to share pay scale information with job applicants and employees upon request.  In addition, employers with 15 or more employees are required to include the pay scale for a position in any job posting.  SB 642 clarifies “pay scale” to mean a good faith estimate of the expected salary or hourly wage range that an employer reasonably expects to pay for the position upon hire.

The amendments SB 642 requires to the Equal Pay Act are far more impactful.  In its present form, Labor Code section 1197.5 prohibits an employer from paying its employees at wage rates less than the rates paid to employees of the opposite sex or another race or ethnicity for substantially similar work, except where the employer is able to demonstrate the application of certain limited exceptions.  SB 642 expands “wage rates” to include all forms of pay, such as “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.”  Thus, any difference in benefits or perks might now serve as a basis for an equal pay claim.

In addition, SB 642 increases the statute of limitations for equal pay claims to three years after the cause of action occurs, which is defined as when an unlawful practice or decision is adopted, when individual becomes subject to it, or when an individual is affected by it (e.g., when that person is paid lower wages, benefits or other compensation).  SB 642 also permits recovery of the difference in wages for the entire period of violation, not to exceed six years.  Finally, the bill revises Labor Code 1197.5 to prohibit lesser wages to another sex rather than only the “opposite sex”. 

SB 642 will become effective on January 1, 2026.  Employers should use the intervening period to review their pay policies and disclosure practices to make sure that all forms of compensation are considered, and make appropriate adjustments. 

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