On September 30, 2020 Governor Newsom signed SB 973 into law, which creates pay data reporting requirements for employers starting in March 2021 and annually thereafter. SB 973 will require private employers with 100 or more employees to submit an annual Pay Data Report to the California Department of Fair Employment and Housing (DFEH). This new measure is California’s latest attempt to identify wage patterns and allow for targeted enforcement of equal pay or discrimination laws.
The annual report to the DFEH must include the number of employees, and the hours they worked:
- By race, ethnicity, and sex.
- In each of the job categories in the federal EEO-1 report.
- Whose annual earnings fall within each of the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics Survey.
The first report is due March 31, 2021.
In an attempt to add some clarity to this new legislation the DFEH issued a frequently asked questions page to assist with compliance. A few important takeaways from the FAQs are highlighted below. Other FAQs can be found on DFEH’s website linked here.
FAQs Takeaways for Employers
- Any individually identifiable information submitted to DFEH pursuant to this new regulation shall be considered confidential information and not subject to disclosure pursuant to the California Public Records Act.
- If employers fail to provide the required report, DFEH may seek an order requiring the employer to comply with these requirements and shall be entitled to recover the costs associated with seeking the order for compliance.
- An employer has the requisite number of employees to fall within the provisions of these requirements if the employer either employed 100 or more employees in the Snapshot Period chosen by the employer or regularly employed 100 or more employees during the Reporting Year.
- Employees located inside and outside California are counted when determining whether an employer has 100 or more employees. (See Cal. Code Regs., tit. 2, § 11008(d)(1)(C)). When reporting to DFEH, employers must include their employees assigned to California establishments and/or working within California, and employers may include their other employees.
- As of February 1, 2021, DFEH has released a User Guide to the Pay Reporting Portal, a Pay Data Sample Excel Template and a CSV Example on its website to help employers with submitting their data.
- In addition, DFEH’s Pay Reporting Portal will go live on February 16, 2021. This portal can be used by employers to submit their data to DFEH.
What Employers Should Do to Prepare
As the March 31, 2021 reporting deadline approaches, employers should begin compiling employee background data if they do not already have it. As of February 1, 2021, employers can utilize DFEH’s Sample Template to begin completing their report and to better understand how to document the required data. Employers also may want to conduct a privileged pay equity analysis based on its data to determine if they have any potential issues prior to reporting its data to the DFEH.