Question: I was told my business might have to report the pay data of my employees soon. Is this a new requirement?

Answer: Yes, there is a new pay reporting requirement in California, but it only applies to employers with 100 or more employees.

California enacted legislation on September 30, 2020 (SB 973) requiring private employers of 100 or more employees (with at least one employee in California) to report pay and hours-worked data by establishment, job category, sex, race, and ethnicity to the Department of Fair Employment and Housing (“DFEH”) by March 31, 2021, and annually thereafter.  Though this is a new reporting requirement for California, the California pay data report closely resembles the federal Equal Employment Opportunity Commission report (EEO-1) that large employers are already familiar with.  An employer must comply if it either employed 100 or more employees in the Snapshot Period chosen by the employer (a single pay period between October 1 and December 31) or regularly employed 100 or more employees during the Reporting Year.

Covered employers must submit the annual report electronically through the DFEH pay data submission portal, available on the DFEH web page.  In the annual report, covered employers must report the number of employees by race, ethnicity, and sex in each of 10 different job categories: 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; and Service workers.  Covered employers must also report pay and hours-worked data by establishment, job category, sex, race, and ethnicity.  Any data submitted that is associated with a specific person or business will be kept confidential and will not be subject to a California Public Records Act request.

To assist employers with this filing requirement, the DFEH recently established a web page and published answers to a series of frequently asked questions (FAQs) that address topics related to the filing requirement.  In addition to the FAQs, the web page includes a link to the pay reporting portal, a guide to using the portal, and instructions for submission. The portal can be accessed at: https://www.dfeh.ca.gov/paydatareporting/

In addition to supplying the DFEH with wage data through this new reporting requirement, SB 973 authorizes the DFEH to enforce the Equal Pay Act, which already prohibits unjustified pay disparities.    If the DFEH has not received a required report by the deadline, it may seek an order requiring the employer to comply with the new pay data reporting requirements, and it will be entitled to recover the costs associated with seeking the order for compliance.  In light of the COVID-19 pandemic, the DFEH will consider an employer’s request that the DFEH defer seeking an order for compliance.  To request a deferral, an employer must submit its request before March 31, 2021, using an electronic form provided on the DFEH web page.  Currently, there are only three reasons for which an employer may request a deferral: lost records due to a natural disaster; a severe economic hardship; and technology or infrastructure changes that must be made to report the required pay data information.  Covered employers who are granted a deferral will only have through April 30, 2021 to file its report with DFEH.

The pay data reporting requirement is complex. Covered employers should promptly prepare for this new requirement.