On November 23, 2020, the California Department of Fair Employment and Housing (DFEH) released new FAQs to clarify requirements of new California pay data reporting set to go into effect next year. As commented on in our October 1, 2020 and November 17, 2020 posts, the California Senate passed SB 973 on September 30th, 2020, requiring large employers to report pay data on all California-based employees. This newly codified law takes effect January 1, 2021, and the first reporting deadline will be March 31, 2021. Then annual reporting will be required every year thereafter. The law specifies that large employers of 100 or more employees and employers that file an annual EEO-1 report will be required to report their pay data from the prior year.
Employers covered under this law are required to report California employees at two different levels: one for each brick and mortar establishment where California employees report, and one consolidated report including all California employees. In terms of what will be submitted, this information will closely resemble the EEO-1 Component 2 data employers were required to report to the EEOC last year. Therefore, employers can expect to provide total employee counts, the W2 box 1 earnings, and the total number of hours worked for all employees in an aggregated or consolidated format and by establishment. This information will be categorized by the race/ethnicity and sex of all individuals broken down by EEO-1 category and 12 pay bands established by the U.S. Bureau of Labor Statics (BLS) in the Occupational Employment Statistics survey.
When reporting pay data, employers must select a single pay period between October 1st and December 31st of the “reporting year” or prior year. This snapshot will resemble all employees on the organization’s payroll at that time, but the organization will need to wait until January 1st to report the yearly box 1 earnings of all employees.
Who is Included?
In recent FAQs published on the California DFEH pay data reporting website, the DFEH stipulates that an employer’s California-based employees and non-California based employees will count towards this 100 employee threshold. If the employer has at least 100 employees during the data snapshot or regularly employs 100 employees throughout the year, they will be required to file under this new law. In addition, even if there are part time employees who make up part of the workforce, employers are still required to file if they have 100 employees within their payroll.
On the topic of teleworking employees, the FAQs state that employers should report (1) all employees who sit in California (either at a California establishment or a teleworker based in California regardless of where they report to) and (2) out of state teleworkers who report into a California establishment (and would be in the California EEO-1 report). Employers have the option to report on their remaining employees if they want to (even if they do not work in California) if this decreases the burden.
Other Key Take-aways
There is no specific report for company headquarters. An employer’s headquarters will be reported as an establishment for California DFEH purposes. Also, in terms of reporting employee counts by sex, employers should prepare to report non-binary self-IDs, in addition to female and male, if they collect this information. As mentioned in the FAQs, California recognizes three genders under the Gender Recognition Act of 2017.
Next Steps
We are still waiting for details on the exact method employers will be using to upload information to the DFEH. We know they are in contact with vendors on its creation but still have no word on when the system will be live for filing.
DCI will be staying on top of all new information and sending out updates as they come in. You will find more information on our DCI landing page on the California pay reporting and through our DCI blog.
By Jeff Henderson, Consultant, and Tyler Wurtz, HR Analyst, at DCI Consulting Group
