Written by:
Danielle H. Moore, Partner, Fisher Phillips, dmoore@fisherphillips.com
Darcey M. Groden, Associate, Fisher Phillips, dgroden@fisherphillips.com
In September 2020, Governor Newsom signed into law Senate Bill 973, which requires that private employers with 100 or more employees annually report detailed pay data categorized by gender, race, and ethnicity. The law is one of many sought by employee rights advocates that are meant to close any pay gap faced by female and diverse workers. The purpose of the law is to require employers to disclose how they pay employees and force them take a hard look at any pay disparities.
Employers must report this pay data to the Department of Fair Employment and Housing (DFEH) by March 31, 2021. This is what employers need to know:
Who?
The requirement applies to all private employers with 100 or more employees.
What?
You must submit specific pay data to the Department of Fair Employment and Housing (DFEH) for the time period covering the prior calendar (Reporting Year). The report must include the following information:
- The number of your employees by race, ethnicity, and sex in a number of specific job categories.
- The number of employees by race, ethnicity, and sex, whose annual earnings fall within certain pay bands used by the U.S. Bureau of Labor Statistics in its Occupational Employment Statistics Survey.
- The total number of hours worked by each employee counted in each pay band during the Reporting Year.
- The employer’s NAICS code.
- Optional section: any clarifying remarks by the employer.
When?
The report is due on or before March 31, 2021, and on or before March 31st each year thereafter. Note – there is a one-month extension available for limited reasons.
Where?
You must submit your report online at dfeh.ca.gov/paydatareporting/
Which Employees Need to Be Included in the Report?
Single-establishment employers (one company or branch): All California employees (including employees teleworking outside California but reporting to California).
Multiple-establishment employers with establishments inside and outside California (companies with more than one entity, branch, or division):
- Must report on all employees assigned to California establishments (including employees teleworking outside California but reporting to California) and/or working within California; and
- May report on its employees not covered by those listed in (1) employees working and reporting outside of California. Doing so is not required.
Consequences for Non-Compliance
The law authorizes the DFEH to prosecute employers who do not comply. Specifically, the DFEH can seek an Order requiring you to comply with the requirements and to recover costs associated with forcing your compliance. The DFEH may also use the information to prosecute employers for equal pay claims after reviewing the data in your report. And, the DFEH is also required to share the information to the California Department of Labor (DLSE) if requested, so that the DLSE may also pursue pay claims against the employer.
Conclusion
Compiling the report will take time and the deadline is just around the corner. Employers should start their compliance efforts now. And, in compiling the required data, employers should also evaluate their pay practices to uncover hidden disparities, so that they can take proactive corrective measures before the DFEH or DLSE comes knocking.
Also, consider partnering with a Leavitt Group preferred partner for employment law, like Fisher Phillips, to perform an audit that is protected by the attorney-client privilege and thus, not evidence.
If you need assistance with ensuring compliance by March 31st or help with an audit and taking corrective measures, please don’t hesitate to reach out to Danielle H. Moore, dmoore@fisherphillips.com, (858) 597-9616; or Darcey M. Groden, dgroden@fisherphillips.com, (858) 597-6927.
