On September 30, 2020, California Governor Gavin Newsom signed legislation (SB 973) requiring private employers to submit an annual pay data report to the California Department of Fair Employment and Housing (DFEH) by no later than March 31, 2021 and annually thereafter. Private employers covered by this law have 100 or more employees and are required to file an annual, federal Employer Information Report (EEO-1). The law defines employees as:

  • Individuals on the employer’s payroll, including part-time workers;
  • Who the employer must include in an EEO-1 Report; and
  • Who the employer must withhold federal Social Security taxes from their wages.

The pay data report looks back at the prior calendar year, defined as the reporting year and the first report will cover 2020, and must include all of the following:

  • Number of employees by race, ethnicity, and sex in 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.
    • Service workers.
  • Number of employees by race, ethnicity, and sex, whose annual earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey.
  • “Snapshot” that:
    • Counts all of the individuals in each job category by race, ethnicity, and sex, employed during a single pay period of the employer’s choice between October 1 and December 31 of their reporting year.
    • Includes each employee’s total earnings, from their Form W-2, for the entire reporting year regardless of whether they worked the full calendar year. Employers must tabulate and report the number of employees whose W-2 earnings during the reporting year fell within each pay band.
  • The total number of hours each employee worked, counted in each pay band during the reporting year. For multi-establishment employers, a report must be submitted for each business, along with a consolidated report including all employees, and the employer’s North American Industry Classification System (NAICS) code.
  • A clarifying remarks section where employers can, but are not required, to explain any of the information it provided.

Alternatively, employers may submit a copy of their federal EEO-1 report, with the same required pay data, to the DFEH to be compliant. The law is effective January 1, 2021.

HR Laws can be incredibly overwhelming to manage and can lead to costly mistakes that many small business owners can’t afford to make. HR outsourcing is a great tool for business owners to help them navigate the complicated HR landscape and minimize risks and compliance issues so they can focus on growing and running a successful business.

For more information about solutions to get ahead of the above challenges, please contact California Labor Solutions. We are based out of Orange County, California and we offer HR Consulting Services that include: HR Outsourcing, Regulatory Compliance Solutions, and Supplemental HR Support (for in-house teams). Additionally, we offer Training & Professional Development, Remote Workers Management and Workplace Investigations.