California Civil Rights Department Issues Clarifications on California Pay Data Reports

It’s almost spring, and you know what that means! It’s almost time to file the California pay data reports. Last year was the first year for filing expanded pay data reports under SB1162, which requires private employers with 100 or more employees to file a report with the Civil Rights Department disclosing certain pay data according to race, ethnicity, and gender. Covered employers are also required to file a Labor Contractor Employee pay data report if they hired 100 or more labor contractors to perform labor within the client employer’s usual course of business. The reports are due May 8, 2024, just a few short months away.

On February 1, 2024, the Civil Rights Department (CRD) updated its guidance.  The majority of the guidance remains the same as last year, with a few notable clarifications, detailed below.

Out with the old, in with the new. Templates, that is.  The CRD has updated the User Guide and all the linked templates for Excel and .CSV files. The newest templates must be used.  The CRD has cautioned that use of the prior year’s templates will be rejected by its portal.  Another new feature this year is the ability to hover over a column for instructions pertaining to a certain category of reporting, rather than having to cross-reference the instructions each time.

New data fields for remote workers. This year employers must report the number of employes who worked remotely. For this purpose, “remote workers” (both payroll employees and labor contractor employees) are those staff who work entirely remotely, teleworked or were home-based and who were not expected to regularly report in person to a physical establishment to perform their work duties.  Employees who work in a hybrid model (who report both in person and remotely) are not considered remote workers for pay data reporting purposes. Employers are to use the snapshot period when determining whether to classify an employee as a remote worker. If an employer is unsure of the assigned location of a remote worker, the employer’s headquarters should be reported as that worker’s assigned establishment.

All employees must be assigned a race/ethnicity and gender. Last year, filers were able to report “unknown” for race/ethnicity or gender of a labor contractor employee.  This year, marking “unknown” will no longer be permitted. The CRD directs employers to follow the EEOC’s longstanding instructions for reporting race/ethnicity. The categories offered for race/ethnicity reporting are taken from the EEO-1 survey so as to be consistent with federal reporting. Employee self-identification is the preferred method for identifying race/ethnicity.  However, if an employee declines to state their race/ethnicity, employers must still report the employee as one of the seven race/ethnicity categories. If that is not possible, employers should determine race/ethnicity using (in this order) employment records, other reliable records, or observer perception. When the employer chooses to use observer perception, the CRD encourages employers to use the clarifying remarks field in the reporting form to state: “The race/ethnicity of (number) of employees in this employee grouping is being reported based on observer perception.”

Similar rules apply to reporting of gender. Gender must be reported by employers as either male, female or non-binary.  Employee self-identification is the preferred method for identifying gender. However, if an employee declines to state their gender, employers must still report the employee’s gender as one of the three categories permitted. Employers may refer to current employment records or other reliable information, such as an employee’s preferred pronouns.

Are you in or are you out? Inclusion in the pay data report depends on where your staff may live and/or report to work.

  • If employees/labor contractors telework outside of California but are assigned to a California establishment, they are to be included in the pay data report1
  • If employees/labor contractors telework from California and are assigned to an out-of-state establishment, they should be included in the report;
  • Employees/labor contractors assigned to a California establishment and who work at client sites out of state should be reported;
  • Employees/labor contractors who live in California but physically work at an establishment outside of CA do not need to be included in the report.

CRD requests collaboration on the labor contractors “snapshot.” Although not required by statute, the CRD is recommending that client employers collaborate with each of their labor contractors to choose a single pay period between October 1 and December 31 of the Reporting Year that will serve as their “Snapshot Period.”  The CRD encourages use of the same Snapshot Period across all of an employer’s labor contractors, presumably for ease of CRD review.

Labor contractor’s requirement to supply data. The CRD has stated that when a labor contractor “reasonably should know” that a client employer is obligated to file a Labor Contractor Employee Report,” the labor contractor “shall” supply necessary data to the client employer, whether or not the client employer requests the data.  Although not found in the statute, the CRD has imposed this affirmative sharing requirement. However, when a labor contractor “reasonably does not know” whether a client employer is obligated to file such a report, the labor contractor need only supply the data upon request. The CRD encourages labor contractors to reach out to their client employers to inquire if they have such an obligation.  California employers should begin preparing now for these significant new legal requirements.

See Footnotes

1 This includes all employees who work remotely and are not assigned to other locations, and thus are assigned by default to the company’s California HQ.  In addition, if the remote workers are working from California but assigned to a HQ outside of California, they are included in the report.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.