California SB 642: The 'Good-Faith' Pay Scale Rule That Redraws Your Job Postings

California SB 642: The "Good-Faith" Pay Scale Rule That Redraws Your Job Postings

If you have ever posted a $90,000–$250,000 range to technically satisfy California's pay transparency law, that shortcut is now a liability. On October 8, 2025, Governor Newsom signed [SB 642](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB642), and its amendments to California's Equal Pay Act took effect on January 1, 2026. The headline change is deceptively small: the law rewrites the definition of "pay scale." But that one edit shifts the burden from posting a range to posting a range you can actually defend.

For comp teams, this is not a poster-in-the-breakroom update. It changes what you write in every job ad, how long your exposure lasts, and what counts as "pay" in the first place. This piece walks through exactly what SB 642 changed, why the phrase "good faith" carries all the weight, and how a structured job evaluation gives you a range you can stand behind. Let's get into it.

TL;DR

• SB 642 took effect January 1, 2026, amending California's Equal Pay Act and Labor Code pay scale rules.
• "Pay scale" is now a good-faith estimate of what you reasonably expect to pay for the role upon hire — not a catch-all range for the whole job.
• The originally proposed 10% cap on range width did not make the final law, but posting an implausibly wide range now invites a bad-faith challenge.
• "Wages" is defined broadly to include bonuses, stock, allowances, and other forms of pay for equal-pay comparisons.
• Employees can file within three years, and recover back pay for the full period a violation existed, up to six years.
• The fix is structural: set ranges from a defensible job evaluation, not from gut feel.

What SB 642 actually changed

SB 642 is narrow on paper and wide in practice. Four changes matter most to anyone who sets or posts pay.

A new definition of "pay scale"

Before 2026, California defined "pay scale" as the salary or hourly wage range an employer expected to pay for the position. That phrasing let some employers post a range wide enough to cover every possible hire, from the most junior to the most senior version of a role.

SB 642 tightens the language. A pay scale is now "a good-faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire," as employment-law analysts have noted. Read those last two words carefully. You are no longer describing the theoretical span of the job over a full career. You are stating what you expect to pay the person you actually hire, on day one. In practice, that narrows most posted ranges.

The 10% cap that didn't survive

As introduced, SB 642 would have capped a posted pay scale at 10% above or below the mean of the range. That provision did not make it into the final law, so there is no hard numeric limit on range width in 2026. Do not misread this as a loophole. The "good-faith" standard replaces the bright-line cap with a judgment call, and a $160,000-wide range for a single role is exactly the kind of posting a plaintiff's attorney will argue was not made in good faith. You lost the ceiling but gained a harder-to-game standard.

A broader definition of "wages"

SB 642 also expands what "wages" means for equal-pay comparisons. It now sweeps in bonuses, stock, stock options, allowances (think cleaning or gasoline allowances), hotel accommodations, and travel reimbursement, among other forms of pay. That matters because equal-pay claims compare total compensation for substantially similar work. If your base salaries look aligned but your equity grants or bonus targets skew by gender or race, that gap is now squarely in scope.

A longer runway to sue

The enforcement timeline got friendlier to employees. An employee can bring an Equal Pay Act claim within three years of the alleged violation, and recover for the entire period the violation existed — capped at six years. A pay gap you created in 2024 and never corrected can still generate a claim and years of back-pay exposure. Quiet, uncorrected disparities compound.

Why "good faith" is the whole ballgame

Every meaningful change in SB 642 orbits one phrase: good faith. The state stopped telling you the mechanical width of an acceptable range and started asking whether your number is honest.

That is a harder standard to fake and an easier one to meet if your pay structure is real. Consider two employers posting for a Senior Analyst. The first posts $95,000–$230,000 because leadership wants "flexibility." The second posts $118,000–$138,000 because that is the pay grade the role lands in after evaluation, and it reflects what they expect to offer a qualified hire. If a dispute arises, the first employer is explaining a $135,000 spread. The second is handing over a scorecard.

Good faith is not a vibe. It is documentation. And documentation is exactly where most comp programs are thin.

The companion bill you should not ignore: SB 464

SB 642 did not arrive alone. Newsom also signed [SB 464](https://www.seyfarth.com/news-insights/california-amends-its-pay-data-reporting-requirements.html), which sharpens California's pay data reporting regime. As of January 1, 2026, covered employers must store the demographic data used for pay data reports — race, ethnicity, and sex — separately from regular personnel files, so day-to-day managers cannot see it during routine employment decisions. Penalties climbed to $100 per employee for a first violation and $200 per employee for repeat failures, and the Civil Rights Department can now levy those fines directly.

There is a 2027 change worth putting on your roadmap now: California will drop the 10 EEO-1 job categories in favor of 23 occupation-specific classifications drawn from the Bureau of Labor Statistics' Standard Occupational Classification system. That means a more granular map of who sits where — and more places for an unexplained gap to show up. If your jobs are not cleanly leveled, that reclassification will be painful.

How to post a range you can actually defend

Here is the through-line comp leaders should take from SB 642: a defensible posted range is a byproduct of a defensible pay structure. You cannot reverse-engineer good faith at the moment you draft a job ad. It has to already exist in how you scored and grouped the work.

That is the case for a structured, point-factor approach to job evaluation. The point-factor method scores each role against weighted, consistent factors — skill, effort, responsibility, and working conditions, broken into sub-factors — and translates those scores into pay grades. When a Senior Analyst lands in Grade 7 and Grade 7 carries a $118,000–$138,000 range, your posted "good-faith estimate upon hire" writes itself, and it comes with an audit trail. That is precisely what turns a range from a guess into evidence. For a deeper walkthrough, see our guide to the point-factor method and our breakdown of how to build defensible pay ranges.

If you are staring at a spreadsheet of roles with ranges you cannot fully explain, that is the gap to close first. See how PointFactors scores and levels jobs in a live demo.

A five-step action list for comp teams

You do not need to boil the ocean before your next California req goes live. Work in order.

1. Audit your live postings. Pull every open California role and flag any range wider than roughly 20–25% of its midpoint. Those are your bad-faith risks.
1. Tie each range to a grade. If a posted range does not map to a documented pay grade, you cannot claim good faith. Fix the mapping before you fix the ad.
1. Pressure-test total comp, not just base. Because SB 642 broadened "wages," rerun your pay equity checks on bonus, equity, and allowances by protected class. Our pay equity audit guide covers the method.
1. Separate demographic data now. SB 464 requires it as of January 1, 2026. This is an operational task your HRIS team can start today.
1. Document the "why" behind every grade. Keep the job evaluation scorecard, not just the final number. When a claim reaches back three to six years, that record is your defense.

Comp leaders who already run a structured evaluation will find most of this is confirmation, not construction. Everyone else has a project — but a well-scoped one.

FAQ

When did California SB 642 take effect? SB 642 was signed on October 8, 2025, and its amendments took effect January 1, 2026.

What is the new definition of "pay scale" under SB 642? A pay scale is now a good-faith estimate of the salary or hourly wage range the employer reasonably expects to pay for the position upon hire, rather than a broad range covering the role generally.

Is there a limit on how wide a posted range can be? No hard numeric cap survived. The originally proposed 10%-above-and-below-the-mean limit was dropped from the final law. Instead, ranges must reflect a good-faith estimate, so implausibly wide ranges create legal risk even without a fixed cap.

Does SB 642 change what counts as "wages"? Yes. The definition now expressly includes bonuses, stock, stock options, allowances, hotel accommodations, and travel reimbursement, among other forms of pay, which matters for equal-pay comparisons.

How long do employees have to bring a claim? An employee can file within three years of the alleged violation and recover for the full period the violation existed, up to a six-year maximum.

How is SB 642 different from SB 464? SB 642 amends the Equal Pay Act and pay scale rules that govern job postings and equal-pay claims. SB 464 sharpens California's pay data reporting regime, including data-separation rules and higher penalties, effective January 1, 2026.

Does SB 642 apply to remote roles? California's pay scale disclosure rules apply to positions that could be filled in California, including many remote roles recruited into the state. Treat any req a Californian could fill as in scope.

What is the fastest way to make our posted ranges defensible? Anchor every range to a documented pay grade produced by a consistent job evaluation, and keep the scorecard. A point-factor structure gives you both the range and the paper trail that "good faith" now demands.

The bottom line

SB 642 did not add paperwork so much as raise the bar on honesty. The state now expects your posted range to mean something, your total-comp equity to hold up, and your records to reach back years. The employers who will shrug this off are the ones whose ranges already come from a structured evaluation. If yours don't yet, California just gave you the deadline.

Book a PointFactors demo to see how point-factor job evaluation turns every posted range into a number you can defend — in California and everywhere the transparency wave lands next.

Justin Hampton is the founder and CEO of PointFactors.