Pay transparency enters its enforcement phase: $50K-$150K ranges are over

California’s SB 642, effective January 1 for employers with 15 or more employees, redefined “pay scale” to mean “a good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire.” The specification “upon hire” eliminates the previously acceptable practice of posting ranges that cover all possible seniority levels within a job family. Ontario’s Bill 149, also effective January 1 for employers with 25 or more employees, caps salary ranges at $50,000 spread for positions paying under $200,000. Meanwhile, EU member states face a June 7, 2026 deadline to implement the Pay Transparency Directive, which requires job applicants to receive initial pay information before interviews and mandates gender pay gap reporting for companies with 100 or more employees.

Compliance data reveals an enforcement gap

The shift from disclosure to enforcement comes as compliance data shows significant gaps in existing transparency laws. Analysis of job postings in states with established pay transparency requirements shows that as of January 2025, approximately 24% of advertisements do not comply, according to data from the Federal Reserve Bank of New York using Lightcast job posting records. Even among compliant postings, the quality of disclosure varies substantially. Employers previously operating under laws requiring only “reasonable” ranges could post spreads covering multiple job levels, creating technical compliance without meaningful transparency.

California’s redefinition targets this practice directly. The “good faith” and “upon hire” language requires employers to narrow posted ranges to reflect actual hiring intentions, not theoretical maximums. SB 642 also extends the statute of limitations for Equal Pay Act claims from two years to three, with a six-year lookback period for calculating damages. The law clarifies that violations occur with each paycheck, potentially restarting the statute of limitations.

Ontario’s $50,000 cap creates a hard ceiling for most positions. An employer hiring for a role paying $75,000 - $95,000 can post that range, but cannot hedge by extending it to $125,000 to cover potential future senior hires. The cap forces employers to create separate postings for different seniority levels within the same role family, increasing administrative complexity but providing candidates with useful information. Positions paying $200,000 or more remain exempt from the cap, though they still require range disclosure.

Operational complexity compounds across jurisdictions

The enforcement push creates immediate operational challenges beyond legal compliance. California employers must now audit every job posting to verify ranges reflect actual hiring budgets, not aspirational spans. Companies that historically used broad ranges for flexibility in negotiations find that flexibility eliminated. If a role genuinely spans $90,000 - $180,000 based on experience variations, the employer must create multiple posting tiers: entry-level, mid-level, and senior, each with appropriate $20,000 - $30,000 ranges.

This cascades through compensation systems. HR teams must establish documented criteria differentiating experience levels within the same role title. Internal pay bands require validation against posted ranges. An employee earning $115,000 who sees their role posted at $110,000-$125,000 can file an Equal Pay Act claim with six years of back pay exposure if gender-based differentials exist.

The EU directive operates differently, focusing less on posting requirements and more on ongoing reporting obligations and employee rights. Companies with 250 or more employees must report gender pay gaps annually starting in 2027 using 2026 data. Employers with 150-249 employees report every three years starting in 2027, and those with 100-149 employees report every three years starting in 2031. If reported pay gaps exceed 5% and employers cannot justify the differential through objective, gender-neutral factors, they must conduct joint pay assessments with employee representatives. The burden of proof in discrimination cases shifts to employers, who must demonstrate compliance rather than employees proving violation.

Enforcement shifts liability calculations

Penalties vary by jurisdiction but universally increase exposure. California's enforcement operates through private rights of action, with employees able to sue for violations dating back six years. The state assesses $100-$200 per employee for pay data reporting failures. Ontario provides for Ministry of Labour investigations and fines. The EU directive requires member states to implement "effective, proportionate and dissuasive" penalties.

The EU's shift in burden of proof represents the most significant enforcement change. Once an employee presents initial evidence of potential discrimination (a prima facie case), the employer must demonstrate that compensation decisions resulted from objective, gender-neutral factors. Organizations can no longer rely on the difficulty of proving discrimination. They must affirmatively document justification for every compensation decision.

California's expanded wage definition amplifies this challenge. Employers analyzing base salary for equity now must account for total compensation: bonuses, equity vesting, 401(k) matching, health premiums. This means two employees with identical $150,000 base salaries but different equity packages—one receiving $50,000 in annual equity vesting, the other receiving $20,000—now require the same documentation and justification as a $30,000 base salary differential. If such differentials correlate with gender without objective justification, they create Equal Pay Act exposure with the same six-year lookback period.

The convergence of California's "good faith upon hire" standard, Ontario's $50,000 cap, and the EU's burden-shifting directive establishes a new baseline. Enforcement mechanics now require documentation, standardization, and ongoing monitoring of compensation systems that previously operated with significant managerial discretion. For multi-jurisdiction employers, the choice is between proactive system redesign now or reactive litigation defense later.