California Pay Data Reporting: Employer Requirements & Deadlines

California employers must be mindful of complying with the state’s pay data reporting regulations.

As the state intensifies its efforts to address pay disparities, organizations must submit detailed data regarding their workforce, specifically focused on pay and demographic information.

Recognizing these requirements is crucial to avoid penalties and align with California’s Civil Rights Department (CRD) guidelines. This guide will break down what employers need to know regarding pay data reporting, including requirements, deadlines, and compliance strategies. We’ll also cover how Mosey can improve your state compliance.

What Is California Pay Data Reporting?

California’s pay data reporting requirements were first established under Senate Bill SB973 in 2020 and expanded in SB1162 as part of the state’s broader initiative to tackle systemic pay discrimination. The law mandates that employers provide detailed compensation and demographic information annually.

The Civil Rights Department (CRD) updated the compliance guidance in February 2024, issuing clarifications for employers to enhance their adherence to data reporting requirements.

Pay data reporting aims to promote pay transparency and equity by gathering data that identifies wage gaps, particularly related to gender, race, and ethnicity.

The law is similar to the federal Equal Employment Opportunity Commission’s (EEOC) EEO-1 Component 2 filing requirements. However, it applies specifically to California and includes additional requirements that employers must meet.

Which Employers Are Required To Report?

Pay data reporting requirements apply to the majority of medium to large organizations that operate in California in any capacity, even if their involvement is remote. Most small businesses won’t be required to report, but there may be exceptions in specific cases.

If your organization employs less than 100 people, it’s best to consult a local legal expert familiar with California law and clarify how new reporting requirements may impact your business.

Private Employers With 100 or More Employees

The primary requirement for pay data reporting applies to private employers with 100 or more employees. If your organization has 100 or more workers (even across different states) and at least one employee works in California, it is subject to this requirement.

It’s important to include employees who work remotely if their primary location is in California. Multi-state employers may find this situation challenging. If you utilize remote workers as an out-of-state employer, your compliance is compulsory.

Labor Contractors and Staffing Agencies

In a significant update, employers that use labor contractors must report data regarding those workers if the total number of employees, including contracted workers, is 100 or more. Employers must also provide information about labor contractors used to supply workers.

Smaller Employers in Certain Scenarios

While this requirement generally applies to larger employers, smaller businesses should be aware that the rule may apply to them in specific cases, like if they’re part of a larger control group or have used contractors significantly.

What Data Needs To Be Reported?

California’s pay data report requires employers to submit workforce data broken into several specific categories:

Employee Demographics

Employers must categorize employees into one of three gender categories: male, female, or non-binary. Employees can self-report this information, and employers are then required to transcribe it exactly as the employee described it.

Employees must also be categorized by specific racial and ethnic groups consistent with federal EEO categories. Self-identification is the best way to obtain this information. If an employee declines to state or self-report this information, the employer must decide and report on behalf of the employee.

For example, non-binary can be used as a valid gender marker for an employee who declines to report a gender. Similarly, racial or ethnic group assessments can be made by visual assessment if an employee declines to self-report.

If an employer reports incorrect information as a direct result of an employee’s decision not to formally self-identify, there is no penalty as long as the employer’s assumption was made in good faith.

Pay Bands

Employees must be classified into pay bands, as defined by the U.S. Bureau of Labor Statistics. Employers will need to assign employees to one of 12 pay bands depending on the annual range of their earnings. These pay bands are calculated based on annual earnings rather than hourly rates.

Hours Worked

Employers must also report the total hours worked by an employee for each pay band. This includes regular hours, overtime, and any other hours worked, helping account for pay disparities linked to differences in working hours.

This provides a crucial clarification: If an employee only works 10 hours a week, their earnings may appear disproportionately low when contrasted against a full-time worker. Work hours are a vital context used to demonstrate compliance by directly correlating hours worked with earnings.

Job Categories

Additionally, employers must classify workers into 10 job categories, similar to those used in the federal EEO-1 report. These include roles such as executives, professionals, technicians, sales workers, administrative support, and others.

Accurate categorization is essential for comparative analysis. It’s important to use the categories as described rather than the titles you use within your company. The words you use to describe a role may not be the same as the terminology used to describe classifications on a state or federal level. Using official guidance can prevent discrepancies that may skew data.

Labor Contractor Data

As part of the updated regulations, businesses that hire labor contractors must include the contractor’s name and submit pay data for the employees they supplied. The labor contractor will also be responsible for providing certain data points, but the employer must ensure the submission is complete.

What Are the Deadlines for Pay Data Reporting?

The pay data report must be submitted annually to the California Civil Rights Department. The date will always change, but information must be officially submitted by the second Wednesday of May. The deadline for the 2024 reporting cycle was May 10, 2024, and the deadline for 2025 will be May 14, according to this schedule.

Employers should prepare all necessary data well in advance to avoid last-minute issues and potential penalties for late submission. The submission portal officially opens on Feb. 1 of every year. It is wise to submit data around that time rather than by the deadline.

Finally, employers must know that failure to file or incorrect submissions can result in penalties. Establishing internal systems and processes to collect and analyze the necessary data is a must.

What Is the Filing Process for Pay Data Reporting?

The California Civil Rights Department provides an online portal where employers can submit their pay data reports. To upload your data, you will have to create an account or log into your existing account.

Submit the Appropriate File Format

Pay data must be submitted in a specific format, including CSV files or Excel spreadsheets. The CRD offers templates and instructions on its website to guide employers through the reporting process.

Verify the Data

Once the data is submitted, employers must certify its accuracy and completeness. This requires a company representative’s signature confirming the submission meets all requirements.

What Are Additional Compliance Requirements for Employers?

One of the biggest challenges employers face is collecting and organizing the necessary data. The requirement to break down employee pay into specific bands based on gender, race, and ethnicity can be time-consuming, especially for larger organizations with complex structures.

There are also special considerations for changing demographic information for employees who have worked with the company for more than one reporting period. While an employee’s ethnicity cannot change, their preferred gender might. If an employee changes their gender identity, updating their demographic information is essential.

Collecting accurate data can also challenge employers who use labor contractors. Labor contractors may not have the same reporting systems as their clients, which makes it harder to obtain and verify the data. Establishing a system early in the year can confirm smooth collaboration between employers and contractors.

Stay Compliant With Mosey

If an employer fails to file their pay data report by the deadline, they may face financial penalties. The fines vary depending on the severity of the violation, but they can escalate if the CRD finds evidence of systemic pay discrimination within your organization. Compliance is too important to let slip through the cracks.

Mosey’s compliance management system is designed to assist organizations of all sizes with state and local requirements like California pay data reporting. Let us simplify the process of preparing and filing mandatory reports on time. Schedule a demo with Mosey to learn how we can help your organization stay on track.

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