New California Laws 2026
SB 464: More rules, same gaps in California pay equity
By Ryne C. Posey and Anthony E. Guzman II A major part of California’s recent pay equity strategy has relied on a simple premise: bet- ter visibility produces better oversight and accountability. Originally passed in 2020, the state’s pay data reporting law was meant to deliver that vis- ibility by requiring employers to submit annual pay data broken down by race, ethnicity and sex. But once the reports arrived, the state had to confront the limits of the framework it had created—broad job categories, uneven demographic handling, and inconsistent enforcement that obscured the account- ability and compliance that the law sought to reveal. SB 464 attempts to resolve these limitations by, among other things: More precise job groupings: Requiring employ- ers, beginning Jan. 1, 2027, to remap their workforce into 23 narrower job classifications (up from 10) to replace the old system’s reliance on catch-all catego- ries like “Professionals,” which lumped engineers, accountants, designers, analysts and other distinct roles together in ways that obscured meaningful dif- ferences in work and pay. Mandatory penalties: Tightening enforcement by making previously discretionary penalties man- datory. Whenever the Civil Rights Department seeks enforcement, a court will now impose penalties of up to $100 per employee for an initial reporting failure and $200 per employee for subsequent failures. Segregated demographic data: Requiring em- ployers to store the demographic data collected for pay reporting separately from personnel records, in order to prevent it from impacting employment de- cisions. While these amendments may offer a veneer of progress, what they lack is any assurance that more structure will lead to better information. In practice, SB 464’s broadened scope raises several issues that may limit its impact: High burden, uncertain benefit: Remapping an entire workforce into 23 narrower job classifications is a significant administrative lift, but it is unclear whether the new categories avoid the flaws of the old system, as even new groupings like “Legal Occupa- tions” may still prove just as likely to obscure mean- ingful differences in work and pay. Enforcement bottleneck: SB 464 also does little to fix enforcement. Penalties are now mandatory, but
they still require the Civil Rights Department to ini- tiate an action, meaning compliance will depend on how aggressively the agency pursues non-filers. Large blind spots: SB 464 continues to leave broad swaths of the California workforce uncounted: Public employers are exempt, data for disabled and LGBTQ+ employees isn’t collected, and nearly 99% of California employers (around 43% of the state’s workforce) fall below the 100-employee reporting threshold. California continues to refine the tools it uses to understand pay equity, but SB 464 shows how even structural fixes can only go so far. More categories and stricter rules can organize the data, but they can’t expand the universe of who reports or guaran- tees the utility of what’s reported. For now, the state has rebuilt the reporting framework, but whether that leads to better insight remains an open question. Ryne C. Posey is a partner, and Anthony E. Guzman II is an associate at Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates.
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