Pay data reporting: a breakdown of the California law

On September 30, 2020, California Gov. Gavin Newsom signed SB 973 into law. The new legislation requires certain California employers to submit a pay data report. The consolidated report includes pay data of employees by race, ethnicity, and sex to the California Department of Fair Employment and Housing (DFEH). 

The law was put into effect to help reduce gender and racial pay gaps and has been in the works since 2016. Lawmakers believe collecting this data will “more efficiently identify wage patterns and allow for targeted enforcement of equal pay or discrimination laws,” according to state legislature.

The process will be similar to EEO-1 reports required by the Equal Employment Opportunity Commission (EEOC). In fact, the DFEH help site that offers additional guidance on the submission says they are creating “a system that closely resembles the EEOC’s system” to make reporting easier for employers.  

Who is required to report pay data? 

The requirement only applies to businesses with 100 or more employees, and the deadline to submit your report is March 31, 2021. Then, businesses required to submit the report will need to do so on or before March 31 annually. 

How does a pay-data reporting submission work? 

If you are required to submit a pay data report, first choose a single pay period between October 1 and December 31 of each “reporting year,” also known as a “snapshot period.” 

Then break down your number of employees by race, ethnicity, and sex for each of the 10 EEO-1 job categories. You’ll also need to break them down within each of the U.S. Bureau of Labor Statistics’ pay bands, which you can find below. 

• $19,239 and under
• $19,240 – $24,439
• $24,440 – $30,679
• $30,680 – $38,999
• $39,000 – $49,919
• $49,920 – $62,919
• $62,920 – $80,079
• $80,080 – $101,919
• $101,920 – $128,959
• $128,960 – $163,799
• $163,800 – $207,999
• $208,000 and over

Your submission must also include the following details about your employees and business: 

• Total hours worked by each employee in each pay band
• A label of the “Reporting Year,” “Snapshot Period,” and the number of reports you have submitted 
• Your business’s general info, including name, address, headquarters’ address, contact information, Employer Identification Number, North American Industry Classification System (NAICS) Code, and Dun and Bradstreet Number
• Employee count, both inside and outside of California
• Location count, inside and outside of California
• Your status as a state or federal contractor 
• If you have parent companies, include their name and address
• Any notes you need to include to clarify pieces of information
• A certification from you that the information you submit is accurate

Who should I include in the count?

It can get a bit tricky determining if you need to submit a pay data report based on your employee count, especially if you have employees both inside and outside the state of California. 

Here’s how it works: If you have at least 100 employees, regardless of their locations, you need to submit the report. 

However, you do not have to include the out-of-state employees in your report. You only need to include “employees assigned to California establishments,” according to the legislation. 

But if your employees are working remotely that you assigned to a location in California, you need to include them.

If you have employees that are working remotely in California but technically assigned to a location in another state, you must include them in an establishment report specifically for “those employees teleworking from California and who are assigned to a single establishment outside of California or all employees assigned to that establishment outside of California.” 

Here is an example from the DFEH: 

“If an employer has one establishment in California with 50 employees (with three workers telecommuting from Nevada during the Snapshot Period) and one establishment in Nevada with 50 employees (with three workers telecommuting from California during the snapshot period), the employer would submit (1) an establishment report for their California establishment that covers all 50 employees, including those teleworking from Nevada; (2) an establishment report for their Nevada establishment that covers either only the employees teleworking from California or all 50 employees assigned to the Nevada establishment; and (3) a consolidated report that includes either all 53 employees in/assigned to California or all 100 employees.”

If you have any temporary employees on your payroll, they also count. Another note to remember: you cannot pick a snapshot period where you had less than 100 employees if you regularly have at least 100 employees during the reporting year.  

What if I have multiple locations? 

If you are a multiple establishment employer, you will need to submit a consolidated report for your business as a whole, as well as a different report for each establishment. 

Multiple establishment employers must include the following additional information in their report: 

• For your establishment reports, include the establishment’s name, address, employee count, and major activity
• For your consolidated report, include the covered names and addresses of the establishments 

The DFEH will most likely release more guidance closer to the submission deadline. The organization is also working on an online submission portal.