By Lily Kerr and Benjamin Kerner
The State of California Civil Rights Department’s (CA CRD) fifth annual pay filing is currently underway, with a due date of Wednesday, May 14th, 2025. The filing requirement, first instituted in 2021, was motivated by the rescission of Component 2 of the EEO-1 report, which collected compensation information in addition to the demographic data typically collected as part of the annual EEO-1 filing.
Since the Equal Employment Opportunity Commission (EEOC) was no longer collecting pay data from covered employers, the State of California passed Senate Bill 973 in 2020 to collect similar pay data (W2, Box 5 wages) from companies employing workers in the state. As a result, private employers with at least 100 employees total and at least one employee in California are required to file pay reports with the state annually.
Changes Throughout the Years
During the first two years of the filing, employers had to file the pay data only for employees on their payroll. However, beginning with the 2023 filing, a separate report has been required for labor contractors performing work for the employer during the given filing period. The threshold for submitting this newer Labor Contractor report mirrors that of the Payroll Employee Report, which is detailed above. This change was intended to compare labor contractors who are performing similar work to the company’s payroll employees (within the employer’s usual course of business) to ensure they are being compensated at similar rates. The first year the Labor Contractor Report was required was considered a grace period for employers, as they were permitted to list unknown values for Race and Sex information in the labor contractor data that was submitted.
Beginning with the 2024 filing, unknown demographic information was no longer permitted for labor contractors. In addition, filers were required to report their CA Secretary of State numbers in the Employer Information section of the filing portal. Finally, there were two new fields added to the filing data template itself. Specifically, employers were now required to indicate whether each employee in the filing worked remotely during the filing period, as well as whether they were a California resident.
2025 Filing
This year, employers now have the option to submit data in an additional race category, Middle Eastern and North African (MENA), if they currently solicit that information from their employees. Previously, individuals with origins in this region were categorized as “White” in the filing. This change mirrors the proposed changes to the collection of race and ethnicity data by federal agencies, as set forth by the Office of Management and Budget (OMB)’s Statistical Policy Directive (SPD) 15 last year. However, the timeline for the implementation of the new race categories at the federal level remains to be seen.
Common Questions
Over time, DCI has received questions from client partners and learned useful insights from the CA Pay reporting site that are worth noting for new and returning filers. Here are the most common insights/questions:
Q. For organizations that file for labor contractors, which types of contractors should be included?A. Only workers originating from staffing agencies or contracting organizations completing work in line with the employing organization’s “usual course of business” should be included in the labor contractor report. Independent contractors should not be included.
Q. Do filing organizations need to report labor contractor W2, Box 5 earnings and hours worked for the entire year, or only for work completed with the filing organization?
A. Labor contractor data should only be reported to the state of California for work completed with the filing organization specifically.
Q. Are organizations permitted to use different snapshots when reporting labor contractor data?
A. Yes, when labor contractor data is provided to filing organizations, the contractor/staffing agency may provide the data according to any snapshot period between October and December of the preceding year. For organizations filing data from multiple contractors, this may result in the submission of labor contractor data with varying snapshot periods.
Q. Should organizations include employees on leave of absence or long-term disability in their reported payroll roster?
A. Yes, according to the CA CRD FAQ site, “Employees on paid or unpaid leave, including Family Medical Leave Act (FMLA) leave, California Family Rights Act (CFRA) leave, pregnancy leave, disciplinary suspension, or any other employer-approved leave of absence, are counted.”
A. All remote employees working physically in California or reporting to an establishment physically located in California (through a direct manager) need to be counted in the filing.
For more information regarding common filing questions, visit the California Pay Data Reporting FAQs. Learn how DCI can help your organization with filing on our California Pay Data Reporting page.
