Senate Bill 642, known as the Pay Equity Enforcement Act, amends the Equal Pay and Pay Transparency laws in California. One of the most significant changes under SB 642 is the extension of the statute of limitations for Equal Pay Act claims. Previously, employees generally had two years to file a claim, or three years in cases involving willful violations. SB 642 extends the filing period to three years and broadens employees’ ability to recover compensation for ongoing pay inequities. Further, employees can now seek recovery of lost pay for a period of up to six years for ongoing violations when a claim is filed within the three-year period.

The legislation also clarifies key definitions used in pay equity enforcement. Notably, the bill expands the definition of “wages” and “wage rates” to encompass a wide range of compensation, including bonuses, stock options, profit-sharing plans, benefits, and other forms of remuneration. By adopting a broader definition, California aligns more closely with federal interpretations of compensation and ensures that all forms of pay are considered when evaluating potential disparities.

In addition, SB 642 updates California’s pay transparency requirements by clarifying that a “pay scale” must represent a good-faith estimate of the salary or wage range an employer reasonably expects to pay upon hire. This change is intended to promote consistency and transparency in recruiting and hiring practices.

For employers, SB 642 serves as a reminder to review compensation structures, pay equity analyses, and wage disclosure practices. Employers should ensure that compensation decisions are well documented, supported by legitimate business factors, and regularly evaluated for compliance with California’s evolving employment laws.

As pay equity remains a priority for California lawmakers and regulators, SB 642 underscores the importance of proactive compliance efforts. Employers that invest in regular compensation reviews and transparent pay practices will be better positioned to reduce legal risk and foster workplace equity.

Stokes Wagner will continue to monitor updates and will provide additional updates as they become available. If you have any questions, do not hesitate to contact a Stokes Wagner attorney.

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