By Bicvan Brown and Sebastian Choi

On October 8, 2025, Governor Newsom signed Senate Bill 642 (“SB 642”). SB 642 makes significant updates to the California’s Equal Pay Act, effective January 1, 2026.

California’s current Equal Pay Act prohibits an employer from paying employees wages less than employees of the opposite sex for substantially similar work. Effective January 1, 2026, the Equal Pay Act will be updated to clarify several terms and will heighten employers’ job posting requirements. Employers beware! These updates can broaden employers’ exposures to unequal pay claims.

Wages

Under existing law, the definitions of “wages” and “wage rates” primarily refers to monetary compensation for labor or services and did not explicitly include non-monetary compensation. The new law expands these definitions to include all forms of pay, including but not limited to, 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. This is a broader definition that will require employers to consider all forms of non-monetary compensation when determining employees’ pay rates as compared to pay rates of another sex.

­“Opposite Sex” Updated to “Another Sex”

SB 642 also updates the definition of “sex,” replacing “opposite sex” with “another sex” to cover nonbinary and transgender employees. This is another broader definition that will require employers to consider pay disparities not only between men and women, but between men and nonbinary and transgender employees – and between women and nonbinary and transgender employees.

Pay Scale Job Posts

SB 642 narrows the definition of “pay scale” in any job posting to be no more than 10 percent above or below the mean pay rate within the salary or hourly wage range. Under existing law, employers with 15 or more employees need only to disclose a general or broad range they reasonably expect to pay for a position. The new pay scale transparency requirement (still applied to only employers with 15 or more employees) is designed to give job candidates and current employees clearer insight into compensation ranges; however, in effect, narrower pay scale range postings will increase exposure to employers by allowing easier recognition of pay disparities between sexes.

SB 642 extends the statute of limitations for wage recovery claims under the California Equal Pay Act from two to three years from the date the cause of action occurs, and it extends the statute of limitations from three to four years if the violation was willful.

Finally, SB 642 outlines when a cause of action for unequal pay occurs.

In preparation for 2026, employers will need to narrow pay scales on job postings and evaluate compensation between sexes, including other sexes.

For more information, please contact Bicvan Brown at bbrown@tresslerllp.com.

About Bicvan Brown

Bicvan is a partner in Tressler’s Irvine, California office and Chair of the firm’s national Employment Practice Group. She focuses her practice in all aspects of general litigation and employment matters, including trials, arbitrations and mediations. Bicvan defends defendants and employers while providing advice and counsel against claims such as injury claims, wage and hour (individual and class actions), PAGA, wrongful termination, sexual harassment, discrimination, retaliation and whistleblowing. She defends employers before state and federal agencies such as the EEOC, NLRB, California Labor Commission and California Civil Rights Department. Click here to read Bicvan’s full attorney biography.

About Sebastian Choi

Sebastian Choi is a law clerk working in the Insurance Services and Employment Practice Groups. Sebastian is currently a J.D. candidate at Chapman University, Dale E. Fowler School of Law, expecting to graduate in 2027.