Are You Covered by California's Pay Data Reporting Law?

Private businesses with 100 or more employees—and at least one employee in California—must file 2021 pay data with the Department of Fair Employment and Housing (DFEH) by April 1 this year. Here's what covered employers need to know.

Golden State Goals

The California Legislature passed SB 973 in 2020, which requires covered businesses to report information about employees' pay and hours worked, sorted by establishment, job category, sex, race and ethnicity. The data must be submitted by April 1 each year. (The initial March 31 deadline was changed to observe a state holiday, Cesar Chavez Day.)

The state's goal is to eliminate unjustified pay disparities based on gender, race and ethnicity. "Pay discrimination is not just a women's issue, but also harms families and the state's economy," according to the California Legislature. "Although there are legitimate and lawful reasons for paying some employees more than others, pay discrimination continues to exist, is often 'hidden from sight,' and can be the result of unconscious biases or historic inequities."

Employers are encouraged to perform self-assessments and voluntarily comply with pay equity and anti-discrimination laws.

The DFEH enforces the California Equal Pay Act and the Fair Employment and Housing Act, which prohibit pay discrimination. "Employers' pay data reports allow DFEH to more efficiently identify wage patterns and allow for effective enforcement of equal pay or anti-discrimination laws, when appropriate," according to the agency.

Updated Guidance

SB 973 created "massive pay reporting requirements" for California employers that also file EEO-1 reports with the U.S. Equal Employment Opportunity Commission (EEOC), said Christopher Patrick, an attorney with Jackson Lewis in Denver.

Notably, the EEOC delayed its reporting deadline to May 17 due to the COVID-19 pandemic, but California has not extended its deadline beyond April 1.

Unlike California, the EEOC will not collect pay data this year. Rather, the federal agency will only gather EEO-1 Component 1 information, which asks for the number of employees who work for a covered business sorted by job category, race, ethnicity and gender.

Covered California employers that must submit pay data can access the state's reporting portal, user guide and FAQs through the DFEH website.

Patrick noted that employers must report on their workforce by choosing a single pay period—or "snapshot period"—from the fourth quarter of each reporting year (which is currently 2021). 

That's the "who," he said. For the "what," the submission must provide the number of employees by race, ethnicity and sex in each of the 10 EEO-1 job categories in the EEO-1 Instruction Booklet and within each of the pay bands used by the U.S. Bureau of Labor Statistics (BLS) Occupational Employment Statistics classifications.

Employers should note that the BLS updated its pay bands as follows:

Law firm Ogletree Deakins noted that the DFEH made the following key changes for the 2021 reporting year:

• Updated the deadline to April 1 with no deferral periods.
• Updated the pay bands (noted above) with higher wage intervals.
• Created a new registration process that allows employers to view their completed and certified pay data reports.
• Created a new interface for employers to provide information by answering a series of on-screen questions. However, establishment information and employee details are still provided through a data upload file or by manual entry.
• Updated reference materials, such as the user guide, for the 2021 reporting year.

Importantly, the report must be certified by a company official. "In order to file a pay data report, an official of the employer must certify that the employer's report is accurate and was prepared in accordance with DFEH's instructions," the agency explained. The designated official must:

• Have knowledge of the information contained in the report or obtain such information from someone with knowledge of the data contained in the report.
• Review the report and certify its accuracy.
• Be authorized to file the report on behalf of the employer.

Employers can review detailed instructions in the DFEH's updated user guide.