New California Law Requires Employers To Report Pay Data

McManis Faulkner
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McManis Faulkner

When the calendar flipped over to 2021, we all expected change from a rough 2020.  For employers in California, they got change in the form of a new law that requires their immediate attention and action this spring.  Starting this year, and continuing every year thereafter, qualifying California employers must submit their pay data report to the Department of Fair Employment and Housing (DFEH). The deadline to submit this data is rapidly approaching – March 31, 2021.

As a California employer, what do you need to know?

Legislative Intent

Last fall, the California Legislature passed SB 973, which was signed into law by Gov. Gavin Newsom on September 30, 2020.  Codified as Government Code Section 12999, the law requires private employers with more than 100 employees to submit an annual pay data report to the DFEH.  The deadline to submit the information to the DFEH annually is March 31st. 

In moving this bill forward, the legislature sought to create a process where employers report pay data annually to DFEH to (1) increase transparency about their pay data; (2) encourage employers to self-assess pay disparities along gendered, racial, and ethnic lines in their workforce; and (3) promote voluntary compliance with equal pay and anti-discrimination laws.

Requirements

Specifically, the law applies to all private employers with 100 or more employees and who are required to file an annual Employer Information Report (EEO-1) pursuant to federal law.  The determination of 100 or more employees is made “if the employer either employed 100 or more employees in the Snapshot Period chosen by the employer or regularly employed 100 or more employees during the Reporting Year.”  The “Snapshot Period” is a single pay period between October 1 and December 31 of each year.  In counting employees, an employer must include part-time employees, temporary workers, and employees on leaves of absence.  In addition, one must also count employees who work outside of the state.  Thus, if a private employer files an EEO-1 report and employs over 100 employees, and only one of those employees works in California, the employer is required to submit the pay data report to the DFEH.

The report must include:

  • The number of employees, categorized by race, ethnicity and sex, dependent on job category;
  • The number of employees by race, ethnicity and sex whose annual earnings fall within the pay requirements used by the U.S. Bureau of Labor Statistics;
  • The total number of hours worked by each employee, plus the hours the employee was on either vacation, sick or holiday time; and
  • A certification from the employer that the information in the pay data report is accurate.

For any employer whose business is located solely in California – whether at one location or multiple ones – the DFEH expects the employer’s report to cover all of the employees assigned to those locations, including those who are outside of California, whether or not the employees are working remotely.  If the employer has establishments located out-of-state, but has people working remotely from California, the report should cover either all the employees at each of the out-of-state locations, or only those employees working remotely from California for each out-of-state location.

Can I Defer the Time by Which to File the Report?

The Government Code provides that, if the report is not received by March 31, the DFEH “may seek an order requiring the employer to comply with [the pay data reporting] requirements and shall be entitled to recover the costs associated with seeking the order for compliance.”  Gov. Code § 12999(h).  However, given the effect of Covid-19, and that the law is new, the DFEH will consider a request to defer a compliance order as to any report due by March 31, 2021.  The deferral request, though, must still be submitted by March 31, and it must be submitted via the DFEH’s online form.  Furthermore, the request must be submitted by the employer – i.e., a third party cannot submit the request in the employer’s stead.  If the request is granted, one would have only until April 30, 2021, to submit the required pay data with no further deferrals granted. 

Keep in mind the deferral request is available only for 2021.  The DFEH is advising employers not to presume that a similar deferral period will be available in subsequent years. 

How Do I Submit the Data?

The data must be submitted via the California Pay Data Reporting Portal as an excel or csv file, or by using the Portal’s fillable form.  The Portal, a User Guide, submission examples, and a FAQ can be found here: https://www.dfeh.ca.gov/paydatareporting/.

The report must be submitted by March 31, 2021, for the 2020 Reporting Period and by March 31st every year thereafter.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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