California has a new pay data reporting law, and covered employers must submit the first set of data to the state by March 31, 2021. The new law, known as SB 973 and codified as California Government Code section 12999, applies to private California employers with 100 or more employees, with at least one employee in California. Covered employers must submit pay and hours-worked data by establishment, job category, race, ethnicity and sex (“pay data”) to the California Department of Fair Employment and Housing (DFEH). The first submissions are due on March 31, 2021, and similar data will be due annually thereafter. 

SB 973 reflects the California legislature’s recognition of the continuing and problematic gender pay gap in California. However, the idea of pay data reporting to encourage employers to correct pay disparities and to allow for more targeted enforcement of equal pay or discrimination laws is not new. The Obama Administration proposed a revision to the federal Employer Information Report (EEO-1), which already requires companies with over 100 employees nationwide to submit specified demographic data to the Equal Employment Opportunity Commission (EEOC), to include pay data, as part of what was called “Component 2,” starting in 2018. Implementation of this rule was halted by the Trump Administration in August 2017. To ensure that this pay data would nonetheless be collected in California, SB 973 was signed into law on September 30, 2020. While collection of pay data on a federal level through Component 2 was halted, it is likely that such pay data collection will be implemented by the Biden Administration.

Who must report pay data?

• Private California employers (employers that are not government employers), which employ
• 100 or more employees, with at least one employee in California, who
• Are required to file an EEO-1 report under federal law.

Employees residing inside and outside of California are counted when determining whether an employer has 100 or more employees.

Which employees must be reported on?

• Employees working in California, and
• Employees assigned to California establishments.

Employers may choose to include data for other employees.

Reporting by single-establishment employer

A single-establishment employer in California must include on its pay data report all employees, including any employees residing outside of California, whether or not teleworking.

Reporting by multiple-establishment employer

A multiple-establishment employer must submit a single report containing all required data, organized by establishment. Each establishment’s data must be reported, regardless of establishment size.

Multiple establishments inside and outside of California:

1. Employers must report to DFEH on their California establishments:
• Report on all employees assigned to California establishments, including any employees residing outside of California, whether or not teleworking, and
• Any other California employee, including those teleworking from California but assigned to an establishment outside of California.
2. Employers may report on non-California establishments and employees not covered by (a).

What data must be reported?   

Employers must report data for employees employed during the “Snapshot Period” of the “Reporting Year.” The Reporting Year is the prior calendar year. The Snapshot Period is a single pay period between October 1 and December 31 of the Reporting Year.

For each establishment, employers must report:

• The number of employees by race, ethnicity, and sex in 10 specified job categories;
• The number of employees by race, ethnicity, and sex by specified pay bands for each of the employees in each of those categories; and
• The total number of hours worked by each employee, including any paid time off.

When must the data be reported?

• The first report is due March 31, 2021.
• After March 31, 2021, annually by March 31.

How must the data be reported?

• Data must be submitted through the California Pay Data Reporting Portal.
• Data can be submitted in 3 ways, via excel file, .csv file, or via fillable form in the portal.
• Instructions and examples for submission can be found here.

Non-Compliance

• DFEH may seek an order requiring the employer to comply with the requirements of California Government Code section 12999 and is entitled to recover the costs associated with seeking the order for compliance.
• In light of the COVID-19 pandemic and the new reporting requirements, employers may request that the DFEH defer seeking an order for compliance. To do so, employers must submit an Enforcement Deferral Request by completing the DFEH’s online request form before March 31, 2021. Employers granted a deferral will have until April 30, 2021 to file their reports.

Key takeaways for covered employers:

• Prepare for compliance now.
• Review company systems housing reportable data to ensure data is available in the format mandated by the DFEH.
• Multiple-establishment employers with establishments outside of California must determine whether any of their employees located outside of California are assigned to establishments in California, such that their data is reportable.
• Review detailed DFEH guidance, FAQs, and reporting templates here.
• Be ready to review data and address areas of concern.

Dentons’ California Employment & Labor team is available to assist with any compliance related questions.