California has enacted legislation (Senate Bill 973) that establishes a new pay data reporting requirement for certain private employers. The new California pay report largely mirrors the U.S. Equal Employment Opportunity Commission's (EEOC) now-abandoned pay data reporting requirement.
California's pay data reporting requirement applies to employers:
Timing and Content of Reports:
Covered employers will have to provide California's Department of Fair Employment and Housing (DFEH) with pay data by specified job categories and by race, ethnicity, and sex. The reports will be due on an annual basis, starting March 31, 2021, for calendar year 2020. Employers will be required to report on all full- and part-time employees working during a "workforce snapshot period" — which is any pay period between October 1 and December 31 of the prior calendar year (the "Reporting Year").
The report will include:
- The number of employees by race, ethnicity and sex in the workforce snapshot period, by EEO-1 job category.
- The number of employees by race, ethnicity, and sex whose annual earnings fall within each of the pay bands the U.S. Bureau of Labor Statistics uses in the Occupational Employment Statistics survey ($19,239 and under; $19,240-$24,439; $24,440-$30,679; and so on). The earnings are calculated using the total earnings shown in Box 1 of the employee's IRS Form W-2 for the relevant Reporting Year.
- The total number of hours worked by each employee counted in each pay band during the Reporting Year.
The statute defines an "employee" as an "individual on an employer's payroll, including a part-time individual, whom the employer is required to include in an EEO-1 Report and for whom the employer is required to withhold federal social security taxes from that individual's wages."
Complying with the Requirement:
Employers may comply with the new law by submitting a copy of their federal EEO-1 report containing the same or substantially similar pay information required above (even though employers no longer need to submit this pay data to the EEOC).
The California law states that employers with multiple establishments must submit a report for each establishment as well as a consolidated report that includes all employees. Employers also have the option to provide clarifying remarks concerning the information in the report, should they choose to do so.
Employers must provide the data in a form that allows the DFEH to search and sort the information using readily available software. At this point, the DFEH hasn't provided a specific form or template for filing the report.
Use of Reports:
The law states that the pay data reports are intended to allow for the designated state agencies to collect wage data to "more efficiently identify wage patterns and allow for targeted enforcement of equal pay or discrimination laws." The DFEH will make the reports available to the Division of Labor Standards Enforcement (DLSE) upon request and maintain the data for at least 10 years. Both the DFEH and DLSE must keep the data confidential except as necessary for administrative enforcement or through the normal rules of discovery in a civil action.
The DFEH is expected to issue additional guidance on the filing requirements. ADP® will provide updates as information is made available. Please contact your dedicated service professional with any questions.