California law requires private employers of 100 or more employees or remote workers hired through labor contractors to annually report pay, demographic, and other workplace data to California's Civil Rights Department (CRD). On February 1, 2024, the CRD issued guidance to assist employers in complying with their reporting obligations. The deadline to submit the required reports is May 8, 2024. The new guidance largely maintains the 2022 pay reporting requirements, with a few material changes. This article provides a synthesis of the new CRD FAQs, focusing primarily on the substantive changes from previous reporting requirements.
Effective January 1, 2023, Senate Bill 1162 (codified in California Government Code Section 12999) enhanced California pay data reporting requirements, including by:
- Requiring a private employer of at least 100 employees to file a Payroll Employee Report regardless of whether the employer files a federal EEO-1 report
- Requiring a private employer that has 100 or more employees hired through labor contractors within the prior calendar year to file a Labor Contractor Employee Report covering the employees hired through labor contractors in the prior calendar year
- Requiring that Payroll Employee Reports and Labor Contractor Employee Reports include the mean and median hourly rate of employee groupings (i.e., the groups of employees with the same establishment, pay band, job category, race/ethnicity, and sex)
- Authorizing the CRD to obtain penalties against employers that fail to file their pay data reports
On February 1, 2024, the CRD released updated FAQs for the 2023 reporting period, which can be found here. Below are the material issues addressed in the new FAQs, focusing primarily on the substantive changes from previous reporting requirements.
Identification of Remote Workers
The CRD now requires that employers report the number of employees who worked remotely during the reporting period. The CRD defines remote workers as "a payroll or labor contractor employee who is entirely remote, teleworking, or home-based, and has no expectation to regularly report in person to a physical establish to perform work duties." The FAQs further explain that workers who split their time working remotely and coming into the office do not qualify as remote workers for the purpose of the CRD's required pay data reporting.
Demographic Data Required for Labor Contractor Reports
Unlike in prior reporting years, it is no longer permitted for an employer with 100 or more workers hired through labor contractors to report the "unknown" race, ethnicity, or sex of labor contractors. Currently, the CRD follows the Equal Employment Opportunity Commission's (EEOC) system for race/ethnicity identification, and employers are required to select from one of seven race/ethnicity options for each employee. Although the CRD's preferred method for collection of race, ethnicity, and sex data reports is voluntary self-identification, if a worker declines to provide the information, employers must nonetheless report on sex, race, and ethnicity.
Reports Submitted Though the CRD's Online Portal
The pay data reports must be submitted through the CRD's reporting portal, available here. The CRD does not accept reports submitted by any other method. For employers required to submit both a payroll employee report and a labor contractor employee report, each report must be submitted separately.
Penalties for Non-Compliance
The CRD has the authority to seek an order requiring a covered employer to submit a pay data report when it has failed to do so, and may also recover costs associated with enforcement. The CRD may also seek civil penalties of $100 per employee, with the penalties increasing to $200 per employee for a subsequent failure to file a required report.
Compliance Deadline
The deadline for both sets of pay reports is May 8, 2024. Employers are encouraged to contact one of Venable's experienced Labor and Employment attorneys with questions regarding the new CRD pay reporting requirements. Please feel free to reach out to us to discuss how our attorneys can help you ensure compliance before May's deadline.