California Pay Data Reporting: Here's What You Need To Know

It’s almost time to file your California pay data reports, are you prepared? Or, maybe you need guidance on what the filing process requires and looks like. The CRD (Civil Rights Department) requires private employers with 100 or more employees to file a report disclosing certain pay data according to race, ethnicity, and gender.

In this blog post, we’re breaking down everything you need to know about California pay data reporting for employers. Here’s what you’ll learn:

Who is required to report pay data in California?
What information is required for pay data reporting in California?
How to submit pay data reports to the CRD
Understanding Snapshot Period
Compliance Requirements for Varied Employer Types
Consequences of failing to comply with California’s pay data reporting regulations

Key Updates on Pay Data Reporting in California

The 2023 California pay data reports are due by May 8, 2024.
The labor contractor employee reports will be collected again this year.
The new report format requires more information about remote employees.
CRD emphasizes it will take enforcement actions against employers that do not file reports.

Losing sleep over creating the perfect compliance framework?

Why does California demand large employers to submit pay data to the Civil Rights Department (CRD)?

California’s requirement for large employers to report pay data to the CRD stems from a commitment to identify and address wage disparities. This initiative is grounded in the understanding that comprehensive employer-reported data is crucial for shedding light on pay practices and ensuring fairness across different demographics, including race, ethnicity, and gender.

This reporting process allows the CRD to closely examine wage patterns and effectively enforce equal pay and anti-discrimination laws. The ultimate goal is to foster a more equitable working environment for all Californians so that every individual receives fair compensation. Such measures contribute to workers’ economic well-being and support California’s broader mission of championing civil rights and social justice.

Who Is Required to Report Pay Data in California?

Under Senate Bill 1162, you must report pay data if your company has 100 or more employees or hires 100 or more workers through labor contractors. It doesn’t matter if these employees or contracted workers actually live in California; if your total headcount reaches this threshold, you must submit a pay data report.

Required Information for California's Pay Data Reporting Initiative

The report must include:

Workers’ pay and hours worked, broken down by job category;
The demographics of your workforce (i.e., race, sex, and ethnicity);
The number of employees in each job category (categorized by race, ethnicity, and sex), their pay bands based on earnings (as shown on their W-2 forms);
Specific codes that represent their race-ethnicity-sex classification; and
Calculations of the mean and median hourly rates and total hours worked for each group of employees.

How to Submit Pay Data Reports to the CRD

Use the Pay Data Reporting Portal: Employers must submit their data through the CRD’s data reporting portal, which helps to keep the data in the correct format.
Prepare With Updated Templates: CRD provides updated Excel templates for submitting reports. These templates aim to enhance user experience and ensure consistency in data reporting.
Report on Remote Workers: New reporting requirements include providing data on remote workers. Employers must identify employees who work entirely remotely for a California establishment.

Include Demographic Data for Labor Contractor Employees: Employers using labor contractors for 100 or more workers must report demographic data for these workers. It’s no longer acceptable to report “unknown” for these workers’ race, ethnicity, and gender. Employers are expected to make a good-faith effort to gather this information.

Not sure where to start with all these new requirements?

What Is the “Snapshot Period” for Pay Data Reporting?

The snapshot period is a crucial aspect of this reporting process. It refers to the specific timeframe during which employers collect information such as wages, hours worked, job titles, and demographic data of their employees. The snapshot period usually covers a single pay period chosen by the employer within the reporting year.

Employers must ensure that the data collected during the snapshot period accurately reflects the compensation and demographics of their workforce. Staying updated on changes to reporting requirements is important. Consult with legal counsel or refer to official guidelines from the CRD to help ensure compliance with current reporting obligations.

Compliance Requirements for Varied Employer Types

The compliance requirements for pay data reporting vary based on the type of employer: those operating multiple locations and those employing workers through labor contractors.

For employers with multiple locations across California, the process is simplified to require just one comprehensive report for all locations.

However, when it comes to reporting data for employees provided by labor contractors, the requirements are more stringent. If your business employs 100 or more workers through labor contractors, a separate report for these labor contractor employees is mandatory. This stipulation ensures that the Civil Rights Department receives detailed information on all individuals contributing to a company’s operations, not just those on the direct payroll. To comply, employers must collect necessary data from their labor contractors, covering pay, demographics, and other workforce data, and submit it in a separate Labor Contractor Employee Report.

Consequences of Failing to Comply With California's Pay Data Reporting Regulations

Failing to submit the required pay data reports can lead to significant penalties. Employers face a civil penalty of $100 per employee the first time they fail to report. If you miss reporting again, the per-employee penalty doubles for each subsequent violation. These penalties apply to both the direct employers and labor contractors who fail to provide the necessary pay data to the employers in a timely manner.

How Can Next Level Strategies Help With Your Pay Data Reporting?

You’re on the verge of something big—your business is growing, and with that comes the responsibility of compliance with the law. It’s a big step up, but you’re not alone on this journey.

You don’t need to lose sleep over creating the perfect compliance framework. Our HR services give you exactly what you need in the most efficient and cost-effective way possible.

If the process of pay data reporting is turning into a nightmare, or if you’re just not sure where to start with all these new requirements, we’re here to help. We offer a free consultation to explore how we can support your journey towards being compliant and ahead of the curve.