Beginning January 1, 2021, California private employers with at least 100 hundred employees and who are required to file annual, federal EEO-1 information will now be required to file a pay data report with the California Department of Fair Employment and Housing (“DFEH”) on or before March 31, 2021 and each year thereafter. These new reporting requirements, contained in Government Code section 12999, aim to reduce gender and racial pay gaps and “allow for targeted enforcement of equal pay or discrimination laws.”
With the 2021 reporting deadline quickly approaching, the DFEH has begun to issue guidance to address unresolved questions and clarify employer reporting obligations. The following summarizes the current highlights:
- What employees are counted to determine if the 100-employee threshold is met?
If an employer has at least one employee in California, they must count their employees both inside and outside of California to determine if they meet the 100-employee threshold. Part-time employees and employees on a paid or unpaid leave are also counted.
- What information must be included in the report?
Similar to the federal EEO-1 report, the DFEH report must identify the number of employees by race, ethnicity, and sex (female, male, and nonbinary) within each of the following job categories: executive or senior level officials and managers; first or mid-level officials and managers; professionals; technicians; sales workers; administrative support workers; craft workers; operatives; laborers and helpers; and service workers, for the prior calendar year (the “Reporting Year”). Employers may select a “snapshot period,” i.e., a single pay period (chosen by the employer) between October 1 and December 31, of the Reporting Year, to identify the employees to be reflected in the report. Employers may also include a section for clarifying remarks, in order to add context or provide additional information concerning the disclosed pay data.
The report also must include the number of employees by race, ethnicity, and sex whose annual earnings fall within each of the 11 pay bands established the federal Bureau of Labor Statistics and the total number of hours worked by employees in each pay band during the Reporting Year. Annual earnings are based on W-2 earnings and must reflect employees who did not work the full calendar year.
Employers must include their employees assigned to California establishments and/or working within California (including telework) and may include non-California employees in the report. However, the DFEH expects that a single-establishment employer in California will include on its pay data report all employees (including any employees outside of California) whether or not teleworking. A single employer with multiple establishments must submit one consolidated report covering all employees and separate reports for each establishment.
- What are the pay bands?
Employers must utilize the pay bands established by the U.S. Bureau of Labor Statistics, which currently are: $19,239 and under; $19,240 – $24,439; $24,440 – $30,679; $30,680 – $38,999; $39,000 – $49,919; $49,920 – $62,919; $62,920 – $80,079; $80,080 – $101,919; $101,920 – $128,959; $128,960 – $163,799; $163,800 – $207,999; and $208,000 and over.
- How do employers submit the report?
The DFEH is currently developing a sample report form and a submission portal that, according to the State, will specify the required information and format for submission. Reports must be submitted in a searchable and sortable format.
- Who will have access to this report?
The information filed with the DFEH may be shared with the Division of Labor Standards Enforcement (“DLSE”); however, the new law prohibits the DFEH, the DLSE, and their staff from making the information public, except as and only to the extent necessary, for purposes of an enforcement proceeding by the DLSE or DFEH.
- What happens if a covered employer doesn’t file the report on time?
If the DFEH doesn’t receive the required report, it has the power to seek an order compelling compliance and recover the costs associated with seeking compliance. Thus, employers should not ignore their obligations under the new law.
What’s next? Employers should continue to monitor the DFEH guidance for additional information that is expected to be released concerning the pay and hours-worked reporting requirements, as well as reporting under special circumstances, such as mergers, acquisitions, and spinoffs. Employers may also consider making any necessary preparations to comply with the March 31, 2021 reporting deadline, including verifying that the required data is stored in a readily producible form. Employers may also want to conduct a pay equity analysis to identify potential disparities before submitting its report.