Large Employers: Upcoming Pay Data Report
Employers of 100 or more employees are required to report to the California Civil Rights Department (CRD) pay and hours-worked data by establishment, pay band, job category, sex, race, and ethnicity. For 2023, the pay data reports are due by May 10. This requirement applies to employers even if they are based outside of California, but have one employee (or even one employee hired through a labor contractor such as an staffing agency) working in California or assigned to an establishment in California.
When Senate Bill 973 was passed in 2020, the California Legislature found that despite significant progress made in recent years to strengthen California’s equal pay laws, the gender pay gap persists, resulting in billions of dollars in lost wages for women each year in California. In 2022, the Legislature passed Senate Bill 1162 to enhance the California pay data reporting law in many aspects. For example, for the first time in 2023, private employers with 100 or more workers hired through labor contractors in the prior calendar year to report pay data for these workers and requiring more information about the employer’s workforce, such as median and mean wage information.
1. SB 1162, passed in 2022 changed a few aspects of the prior pay data reporting requirements.
New deadline of the second Wednesday of May each year (May 10, 2023) (previously deadline was March 31).
Requires additional information: median and mean hourly rate for each combination of race, ethnicity, and sex within each job category.
Requires employers with 100 or more employees hired through contractors to submit a separate report for these employees.
Requires employers with multiple establishments to submit a report for each establishment.
2. Employers who must report.
Under Government Code section 12999(a)(1), a private employer that has 100 or more employees (anywhere as long as it has one employee in California) are required to submit a pay data report to the CRD. An employee is “an individual on an employer’s payroll, including a part-time individual, and for whom the employer is required to withhold federal social security taxes from that individual’s wages.” Gov. Code § 12999(k)(1).
3. Determining if an employer has 100 or more employees.
An employer has the requisite number of employees if the employer either employed 100 or more employees in the Snapshot Period or regularly employed 100 or more employees during the Reporting Year. “Regularly employed 100 or more employees during the Reporting Year” means employed 100 or more individuals on a regular basis during the Reporting Year. “Regular basis” refers to the nature of a business that is recurring, rather than constant. See Cal. Code Regs., tit. 2, §§ 11008(d)(1) & 11008(d)(1)(A).
The Snapshot Period is a single pay period between October 1 and December 31 of the Reporting Year. For the 2023, the Reporting Year is 2022. Employers may choose the single pay period between October 1 and December 31. The Snapshot period is used to identify the employees to be reported on in the pay data report. The employee does not have to be paid during the Snapshot period – it only matters whether the employee was employed during the Snapshot Period.
Employees located inside and outside of California are counted when determining whether an employer has 100 or more employees. See Cal. Code Regs., tit. 2, § 11008(d)(1)(C).
An employer with no employees in California during the Reporting Year is not required to file a pay data report.
Part-time employees, including those who work partial days and fewer than each day of the work week, are counted the same as full-time employees.
Employees on paid for unpaid leave, including the California Family Rights Act (CFRA) leave, pregnancy leave, disciplinary suspension, or any other employer-approved leave of absence, must be counted.
Employers must include all employees assigned to California establishments and/or working within California.
4. Must include remote workers outside of California, but “assigned” to an establishment in California.
The CRD sets forth that remote workers outside of California “assigned” to an establishment in California must be included in the employee pay data report. The CDR provides the following example: If an employer has a single establishment in Riverside, California with 500 employees working from that location, the employer would submit a report covering all 500 employees. If 25 of these employees were working remotely (in California or beyond), the employer’s report would still cover all 500 employees.
5. When a Labor Contractor Employee Report must be filed.
Companies are required to file a separate Labor Contractor Employee Report if it had 100 or more workers hired through labor contractors in the prior calendar year anywhere with at least one worker based in California.
“Labor contractor” – is defined as “an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.” A good example would be a staffing agency.