In an effort to address the gender pay gap, California Governor Gavin Newsom signed into law SB 973 on September 30, 2020, which, among other things, mandates employers to provide new specified data to the Department of Fair Employment and Housing (“DFEH”) regarding employee pay and demographics of the employer’s workforce.
As a result of the new law, any employer with 100 or more employees—at least one of whom is in California—was required to submit a California Pay Data Report on or before March 31, 2021, and each year thereafter. The California Pay Data Report also requires specified information on each employee’s pay data by sex, race and ethnicity.
For employers that requested an extension before March 31, 2021, DFEH freely granted a one month “enforcement deferral period” that extended the filing deadline for those employers until April 30, 2021. However, the information about the enforcement deferral process was issued rather late, and a number of employers not headquartered in California may have missed the opportunity to request an extension. Now that the March 31, 2021 deadline has passed, DFEH states it is no longer considering extension requests.
DFEH advises that if an employer missed the March 31, 2021 filing deadline and did not obtain an extension, the employer should file its report immediately—or as quickly as possible—to avoid DFEH taking action to ensure compliance. In the event that DFEH does seek a court order requiring the employer to comply with California’s pay data reporting requirements, DFEH is entitled to recover the costs associated with seeking that order. (Gov. Code § 12999(h).)
In the California Pay Data Report, employers are required to provide the following:
- The number of employees by sex, race and ethnicity in 10 job title categories: (A) executive senior level officials and managers, (B) first or mid-level officials and managers, (C) professionals, (D) technicians, (E) sales workers, (F) administrative support workers, (G) craft workers, (H) operatives, (I) laborers and helpers and (J) service workers; and
- The number of employees by sex, race and ethnicity whose annual earnings fall within each of the pay bands used by the US Bureau of Labor Statistics in the Occupational Employment Statistics survey.
For purposes of establishing the numbers required to be reported, an employer must create a “snapshot” that counts all of the individuals in each job category by sex, race, and ethnicity employed during a single pay period of the employer’s choice between October 1 and December 31 of the reporting year.
To assist employers with this filing requirement, the DFEH established a webpage and published answers to a series of frequently asked questions (FAQs) that address several topics related to the upcoming filings.
The FAQs answer several important questions, including which employers are subject to the filing requirement, how employees in and out of California are treated for purposes of determining filing jurisdiction, how to categorize employees in the report who identify as non-binary and which employees must and may be included in these filings.
Employers are advised to use these tools when preparing their California Pay Data Reports. Additionally, employers should review and understand how their pay data would be viewed by the agency or a court should the employer be investigated by DFEH for pay disparity claims.
Employers with questions regarding the California Pay Data Report or who may be looking to evaluate their pay data in light of state and federal regulations should consult with their employment counsel.