Governor Newsom Signs Pay Transparency Amendments into Law

Seyfarth Synopsis: On October 8, 2025, Governor Newsom signed into law SB 642, which amends California’s equal pay requirements, including revising the “pay scale” definition, extending the statute of limitations for equal pay claims to three years and permitting recovery for a period up to six years, and defining key terms such as “wages.” These amendments go into effect January 1, 2026. 

SB 642 brings several changes to California equal pay requirements under Labor Code Sections 432.3 and 1197.5 that will require careful review by employers and potential modification to current practices. While California’s Equal Pay Act has been one of the broader equal pay laws in the United States, the amendments to the Act are significant and heighten the risk of potential liability for employers. The amendments are intended to continue to decrease perceived pay inequities and make it easier to seek legal remedies for wage disparities. These revisions are effective January 1, 2026.

Modified Definitions for Job Posting Pay Scales and Wages Subject to Equal Pay Act Requirements

SB 642 requires the pay scale on the posting to be the salary or hourly wage range the employer in good faith reasonably expects to pay “upon hire.” This definition may narrow the posted pay scale because the range should be the range the employer expects to pay to the candidate upon hire, instead of a broader range that some employers might have previously provided to cover the full range for the position.

The amendment also confirms that the definition of wages for equal pay claims aligns with federal Equal Pay Act standards and includes all forms of compensation, including benefits such as life insurance, vacation pay, holiday pay, and stock options, and bonuses. These latter categories can make up a significant portion of “wages” in some sectors. Despite this clarification in the equal pay context, there is no requirement for employers to include additional forms of compensation in the posted pay ranges. 

Expanded Statute of Limitations

SB 642 extends the statute of limitations for civil actions to recover wages under the Section 1197.5 by one year. The statute of limitations is now three years after the last discriminatory pay act occurred. The amendments permit a plaintiff to seek relief for the entire period of time during which a violation exists, but limits any potential recovery to a period of up to six years. 

The amendments also clarify that nothing prohibits the application of the “continuing violations” or “discovery rule” doctrines. The continuing violations doctrine allows employees to recover lost pay for ongoing discriminatory practices beyond the statute of limitations period by arguing that violations are similar and frequent, and thus should be considered a single act and not barred by the statute of limitations. Similarly, the discovery rule, delays the start of the statute of limitations until the point in time when the plaintiff knew or should have known of the discriminatory pay practice.

California’s Equal Pay Act expands the prohibition against sex discrimination to prohibit paying employees of another sex less for performing substantially similar work. Use of the phrase “another sex” replaces the previous use of “opposite sex” to remove binary gender references and makes the language more inclusive. 

Clarification of Cause of Action Accrual

SB 642 clarifies that a cause of action arises when any of the following actions occur:  

(1) an alleged unlawful compensation decision or other practice is adopted; 
(2) An individual becomes subject to an alleged unlawful compensation decision or other practice; or 
(3) When an individual is affected by application of an alleged unlawful compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from the decision or other practice.

This clarification helps define when an equal pay claim accrues, reducing uncertainty about how the statute of limitations applies in pay discrimination cases.

In addition, another bill (SB 464), which remains pending before Governor Newsom, would introduce substantial revisions to California’s annual pay data reporting obligations. Collectively, SB 464 and SB 642 mark an important shift in California’s approach to pay equity compliance. We will continue to monitor legislative developments and provide an update following any action by the Governor.

Workplace Solutions

Employers should familiarize themselves with SB 642’s new and revised definitions, and ensure that all job postings contain compliant pay scale information. For additional information, please contact the authors of this alert, a member of Seyfarth’s People Analytics team, or any of Seyfarth’s attorneys.