Pursuant to Government Code Section 12999, employers of 100 or more employees, and at least one California employee, must report pay and hours worked data by establishment, job category, pay band, sex, race, and ethnicity to the Department of Fair Employment and Housing (DFEH). The deadline to do so is March 31, 2021 and annually on every March 31 thereafter. In enacting this legislation, the Legislature noted that hidden bias exists and is encouraging self-assessment of pay disparities along gendered, racial, and ethnic lines to encourage voluntary compliance with equal pay and anti-discrimination laws.
Who Must Report Pay Data? “Employer” and “Employee” Defined
The reporting requirement is applicable to “Employers” or “a private employer that has 100 or more employees and who is required to file an annual Employer Information Report (EEO-1) pursuant to federal law.” An employee is “an individual on an employer’s payroll, including a part-time individual, whom the employer is required to include in an EEO-1 Report.”
Both California and non-California employees, temporary employees, and employees on leave, count toward determining the 100-employee threshold. The relevant time period applicable for the 100-employee threshold is determined by the snapshot period as explained below, or if the employer regularly employed 100 employees during the reporting year. Employers may not cherry-pick their snapshot period to avoid the reporting requirement.
Pursuant to federal law, certain employers are required to file an Employer Information Report (EEO-1 Report). Submissions to the DFEH mirror the EEO-1.
Thereby, employers will choose a single pay period between Oct. 1 and Dec. 31 of each reporting year, which is known as a “snapshot period.” During that snapshot period, for each EEO-1 Job Category, and for each Pay Band as used by the U.S. Bureau of Labor Statistics Occupational Employment Statistics qualifications, employers will submit employee information including race, ethnicity and sex. Examples of submissions and employee data may be found here: California Pay Data Reporting Portal (Page 10-14).
Only employees assigned to California establishments, including employees teleworking from other states but assigned to California establishments, must be included, but employers may report to DFEH on its establishments and employees outside of California. The DFEH is required to keep such employee information private.
The submission should also include:
- Employer’s name, address, headquarters’ address (if different), Employer Identification Number;
- Number of employees inside and outside of California;
- Number of establishments inside and outside of California;
- Whether the employer is a state contractor;
- Name and address of the employer’s parent company or companies, if applicable; and,
- Total number of hours worked by each employee in each pay band.
Multi-establishment employers must file multiple reports — a consolidated report and one for each establishment. An establishment is an economic unit producing goods or services. In addition to the above, the multi-establishment employer submission should also include:
- The establishment’s name, address, number of employees, and major activity.
- Any clarifying remarks.
- Certification that the information is accurate.
- Information on a company contact for the submission.
To assist with such compliance, the DFEH has:
- issued a User’s Guide (California Pay Data Reporting Portal);
- created a portal through which employers may submit their data (California Pay Data Reporting | DFEH), which will become available on February 16, 2021;
- provided a sample Excel Template (California Pay Data Reporting | DFEH); and
- issued FAQs (Pay Data Reporting FAQs | DFEH (ca.gov)).
What Happens if a Covered Employer Fails to Report on Time?
If an employer fails to make a submission, the DFEH may order compliance and seek the cost associated with such compliance.
Sheppard Mullin is available to provide guidance on California’s new pay data reporting requirements.