Key Requirements of SB-973: Annual Pay Data Report
- On or before March 31, 2021 (and on or before March 31 of each year thereafter) Section 12999(a) requires:
- a private employer (not public employers like state universities/colleges/utilities)
- which employs 100 or more employees
- and is required to file an annual EEO-1 Report pursuant to federal law
- to submit a pay data report to DFEH
- covering the prior calendar year (to be called the “Reporting Year”)
- Per Section 12999(b), the Annual Pay Data Report must include:
-
- the number of employees by race, ethnicity, and sex
- in each of 10 job categories (EEO-1 filers will recognize from the Component 1 report):
- Executive or senior level officials and managers
- First or mid-level officials and managers
- Professionals
- Technicians
- Sales workers
- Administrative support workers
- Craft workers
- Operatives
- Laborers and helpers
- Service workers.
- and reporting the number of employees by race, ethnicity and sex whose “annual earnings” (as reported on the employee’s W-2) fall within the “pay bands” the United States Bureau of Department of Labor Statistics (“BLS”) has devised and uses to collect data in its Occupational Employment Statistics Survey. The pay bands SB-973 seem to refer to are the 10 pay bands the BLS calls “wage ranges” you may see set out below as taken from a 2019 BLS wage survey report:
--> Scroll to see full table data
Under $9.25 |
$9.25 to 11.74 |
$11.75 to 14.74 |
$14.75 to 18.74 |
$18.75 to 23.99 |
$24.00 to 30.24 |
$30.25 to 38.49 |
$38.50 to 48.99 |
$49.00 to 61.99 |
$62.00 to 78.74 |
$78.75 & Over |
--> Scroll to see full table data
Like the federal EEO-1 Report (SF-100), California’s new law requires covered employers to “create a ‘snapshot’ that counts all the individuals in each job category by race, ethnicity, and sex, employed during a single pay period of the employer’s choice between October 1 and December 31 of the ‘Reporting Year.’” See Section 12999(b)(3)
Also like the short-lived federal EEO-1 Component 2 pay data report requirement, employers under the California law must “…calculate the total earnings, as shown on ***[IRS] Form W-2, for each employee in the ‘snapshot,’ for the entire ‘Reporting Year,’ regardless of whether or not an employee worked for the full calendar year. The employer shall tabulate and report the number of employees whose W-2 earnings during the ‘Reporting Year’ fell within each pay band.” See Section 12999(b)(4)
Also like the short-lived federal EEO-1 Component 2 pay data report requirement, the employer must “…include in the report the total number of hours worked by each employee counted in each pay band during the ‘Reporting Year.’” See Section 12999(c)
In addition, employers with multiple establishments within the state of California must submit a report for each establishment and a consolidated report that includes all employees. All employer reports must also report the employer’s NAICS (North American Industry Classification System) code. See Section 12999(d)
The term “establishment” has a “fuzzy” (technical legal term!) definition in the new California statute: “’Establishment’ means an economic unit producing goods or services.” See Section 12999(m)(2)
“California employers will have to work with DFEH to arrive at a consensus as to how to treat employees who work remote out of their homes, particularly during a pandemic,” said Tony Perkins, VP of DirectEmployers Association in charge of its Taapestry affirmative action and EEO group from his remote office in his San Jose, California home. “If an employee working remote at his/her home and ‘producing services’ is an ‘establishment’ within the meaning of Section 12999(m)(2), a former headquarters office tower previously housing 5,000 employees (pre-pandemic) would now have to turn in reports for 5,000 ‘establishments,’” Tony observed. “Hopefully, DFEH will see the wisdom of allowing California employers to roll-up employees who work remote into the establishment where their primary manager would report for work in a pre-pandemic world, especially if DFEH hopes for these reports to assist the agency in comparisons of pay among employees in the same “establishment,” he noted.
While not required to do so, employers may also include a section to provide “clarifying remarks” regarding any information the employer provides. This is an invitation to the reporting employer to attempt to explain the non-discriminatory reasons which may explain non-problematic disparities in pay among Protected Groups.
Important Note: A common employer clarifying remark will be that the data are too highly aggregated and/or do not collect together for comparison similarly situated employees, and/or the data sets are too small to make for meaningful statistical analyses, and/or the data report only “current pay” and not any “pay decision(s)” as California (and federal Title VII law) require. These pay reporting design problems were among other explanations which led federal regulators to declare the short-lived federal EEO-1 Component 2 “hours worked” and “pay data” reporting not useful in any way to either EEOC or OFCCP investigations or even studies about pay data in America: in short, a colossal waste of time and money.
Editor’s Note: A major point of political divide between employers and regulators as to pay data analysis models has been driven for years by the reality that in the federal government, for example, all 2 million+ civilian employees of the United States government are HIGHLY aggregated for pay purposes. Indeed, those two-million + federal civilian employees share only 90 different pay levels [i.e. General Service (GS) Grades 1-15, with each Grade having 6 pay “Steps” (i.e. 15 x 6=90 pay levels)]. Of those 90 pay levels, over twenty of them are rarely used, even at that, and the federal government’s top managers–indeed the ones making the policy decisions–share only six different pay levels (GS-15 Step 1 through GS-15 Step 6). The GS levels thus include in the same pay grade scientists with teachers, with managers, with artists, with photographers, with analysts, with investigators, with lawyers, with librarians, with policy analysts, with statisticians, with computer programmers, etc. in a giant polyglot of federal employees similarly situated by “Grade level.” These large aggregations level pay between all employees within the same Grade and Step, regardless of differing job duties and performance (i.e. the GS Grade Levels do NOT collect together similarly situated employees as Title VII defines that term.)
Federal regulators, and now the California Legislature, have a difficult time understanding why a private corporation’s jobs are not aggregated, like all civilian jobs in the federal government (and in the California state government). Federal regulators, and now the California Legislature, believe that private companies disaggregate job duties and pay to hide discriminatory pay practices between what, for the regulators, are “similarly situated” employees for pay purposes, even if not for similar work duties or similar performance levels.
“Labor is the source of wealth and all culture, and since useful labor is possible only in society and through society, the proceeds of labor belong undiminished with equal right to all members of society”. Karl Marx, Critique of the Gotha Project (1875)
SB-793 will now force analyses of pay of employees artificially pushed into a few very large groups (to artificially make them large enough in number for statistical analyses), but with many different job duties and levels of performance now clustered together (cats and dogs, and hippopotamuses and cheetahs all in the same similarly situated GS-like “herd”). Despite Title VII and California law requirements that investigators and courts analyze the employer’s pay practices, and not create a different pay system, federal, and now California, regulators are creating pay analysis models which do NOT track the way the employer has paid its employees…by assuming, for example, that all employees in one of the 10 “wage ranges” within one of the 10 “Job Categories” are similarly situated:
(i.e. 10 Steps (“wage levels”) x 10 Grades (“Job Categories”) = 100 pay levels…like the federal government’s 90 pay levels!)
NOTE: There are over 100 million employees in the private sector in the United States. There are over 13,000 distinct job titles in the U.S. Department of Labor Dictionary of Occupational Titles, alone.
Section 12999’s command that dissimilar jobs be aggregated “… for data collection purposes 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, when appropriate [see above first reference] makes the very same mistake Ms. Wipper made in recommending a “pay equity” case against Oracle Corporation headquarters while the Regional Director for the Pacific Region (San Francisco) of OFCCP.
As DirectEmployers reported in its September 28, 2020 Week In Review, a USDOL Administrative Law Judge (Judge Clark) just last week dismissed in its entirety that lawsuit Ms. Wipper recommended for litigation amid great fanfare in 2016 and which OFCCP filed in early January 2017. The Court found many flaws in the OFCCP’s compensation case against Oracle. Chief among them was this very same issue of inappropriate aggregation of dissimilar jobs which OFCCP’s expert witness (Dr. Janice Madden) tried in vain to persuade Judge Clark to accept (but which concept the California Legislature has now bought lock, stock and barrel). Here are Judge Clark’s words addressing this foundational “job aggregation issue:”
“Dr. Madden’s analysis is highly aggregated and not attuned to potentially important differences between groups within job functions. Dr. Madden’s analysis does not (sic) similarly situate employees with respect to the work performed.”
* * * *
“Dr. Madden’s measures of experience and education are very rough estimates and poorly capture the sort of education and experience that matters for compensation at Oracle. Dr. Madden’s analysis relies largely on assumption about aggregation and the view that it is unnecessary to control for variances between employees at a group level, but this assumes away the important question about potential explanations for the raw disparities and thus undermines the inferential power of the model.”
A technical note: Employers of California-based employees must submit their pay data and hours worked reports “…in a format that allows the…[DFEH]…to search and sort the information using readily available software.” (emphasis added) See Section 12999(f)