New Pay Equity Reporting Requirements In California Are Due Soon
Topics: New Laws & Legislation
In September of last year, Governor Newsom signed SB 973, California’s first statutory employee data reporting requirement. SB 973 became codified as section 12999 of the California Government Code. The bill was authored by Senator Hannah-Beth Jackson, who also authored California's Fair Pay Act (SB 358). The stated purpose of the bill is to achieve equal pay for women and persons of color. The simple premise is that change will come when pay discrepancies are brought to light and made public.
To that end, private employers with 100 or more employees (anywhere in the US) that are required to file an annual Employer Information Report (EEO-1) under federal law must submit a “pay data report” to the Department of Fair Employment & Housing (“DFEH”) for the prior calendar year (reporting year). This report is due by March 31, 2021 and on or before March 31 every subsequent year. The data will be used by the DFEH, California’s civil rights agency, to investigate pay discrepancies.
The required report consists of a “snapshot” of pay data from one pay period between October 1 and December 31 (employer’s choice) and identifies the number of employees by race, ethnicity and sex who work in ten different job categories ranging from an executive or senior level officer and manager to laborers and service workers. The specific job categories include: (1) executive or senior level officials and managers; (2) first or mid-level officials and managers; (3) professionals; (4) technicians; (5) sales workers; (6) administrative support workers; (7) craft workers; (8) operatives; (9) laborers and helpers and (10) service workers. In addition, the report must identify the number of employees, again 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, established by calculating (a) the total earnings shown on the IRS Form W-2 for each employee in the “snapshot” for the entire Reporting Year; (b) the total number of hours worked by each employee counted in each pay band during the “Reporting Year”; and (c) the employer’s North American Industry Classification System (NAICS) code.
The report is limited to California employees and/or employees assigned to work at a California establishment and must be reported for the Company as a whole, and also, for each establishment in California. An “establishment” is defined as “an economic unit producing goods or services.” The DFEH must make the reports available to the Division of Labor Standards Enforcement (DLSE) upon request and maintain the data for at least 10 years. Both agencies must keep the data confidential, except as necessary for administrative enforcement or through the normal rules of discovery in a civil action.
The pay data is submitted through a portal on the DFEH’s website. The portal will become available on 2/15/21 and a data template will be available to the public by 2/1/21. Links to the portal, user guide and the sample will be found here. The data must be made available in a format like Excel that allows the department to search and sort the information using readily available software. DFEH has published a pay data reporting FAQ which is available by clicking here.
This legislation and the reporting requirements are sure to heighten scrutiny on pay equity and California employers should strongly consider conducting internal analysis and audits of their pay relative to race, ethnicity, and gender to determine if they have exposure.