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.
On November 23, 2020, the California Department of Fair Employment and Housing issued additional guidance for employers regarding their requirement to file employee compensation data with the state beginning in March of next year. Pursuant to recently enacted SB 973, California employers will be required to file detailed information about their workforce’s compensation broken down by race, gender, ethnicity, and job title. The new guidance takes the form of additional Frequently Asked Questions (FAQs). The state issued limited FAQs earlier in November, and additional guidance is expected.
Key takeaways from the new FAQs include:
Employers with 100 or more employees will be required to file an annual report covering the prior calendar year, based on a “snapshot period” of a single pay period between October 1 and December 31 of the prior year. An employer can use the pay period of its choosing as the “snapshot.”
Employers are required to file if they had 100 or more employees during the snapshot period, or if they “regularly” employed 100 or more employees during the reporting year. The FAQs note, for example, that a seasonal business with a three-month season during a calendar year employing 100 or more employees during that season would be required to file.
For purposes of determining whether an employer meets the 100-or-more-employee threshold, the FAQs provide that employees located both inside and outside of California are counted. Part-time employees, and employees on paid or unpaid leave, are counted for purposes of the threshold. An employer that employs no employees in California during the reporting year is not required to file.
For purposes of reporting employee data (versus meeting the 100-employee threshold), employers must include employees assigned to California establishments and/or working within California. The FAQs explain, for example, that a single-establishment employer in California will be expected to include all of its employees (even those who work outside the state or are teleworking), presumably because these employees are “assigned” to the California establishment. Employers with establishments both within and outside California must report any employees working in or assigned to California establishments (including those teleworking from California but assigned to an establishment outside California). An employer may, but is not required, to report on employees who work outside the state, or are assigned to establishments outside the state.
Finally, the FAQs note that the state will be developing a model report form, and that the required information to file will include, but may not be limited to:
- The number of employees by race, ethnicity, and gender in each of the following 10 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; and Service workers.
- One important difference from EEOC’s current reporting requirements pertains to gender. Pursuant to California state law, the state officially recognizes three gender marker categories: male, female, and non-binary (unlike the EEOC, which has historically only recognized male and female gender markers on its EEO reports, with a comment field for employers to identify those workers who identify as non-binary).
- The number of employees by race, ethnicity, and gender, 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. Employers are required to file earnings based on what is reported on IRS Form W-2. An employer shall 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 worked by each employee counted in each pay band during the Reporting Year.
- The Reporting Year, the dates of the Snapshot Period selected by the employer, the report type (establishment report or consolidated report), and the total number of reports being submitted by the employer.
- The employer’s name, address, headquarters’ address (if different), Employer Identification Number, North American Industry Classification System (NAICS) code, Dun & Bradstreet number, number of employees inside and outside of California, number of establishments inside and outside of California, and whether the employer is a California state contractor. If applicable, the name and address of the employer’s parent company or parent companies.
- For a multiple-establishment employer’s establishment reports, the establishment’s name, address, number of employees, and major activity.
- For a multiple-establishment employer’s consolidated report, the names and addresses of the establishments covered by the consolidated report.
- Any clarifying remarks.
- A certification that the information contained in the pay data report is accurate and prepared in accordance with Government Code section 12999 and DFEH’s instructions, and the name, title, signature, and date of signature of the certifying official.
- The name, title, address, phone number, and email address of someone who can be contacted about the report.
The FAQs also set out the “pay bands” in which employers will report their employees, and generally advise employers to follow the EEOC’s guidance for race, ethnicity, and job categories.
As noted, DFEH’s website indicates that additional FAQs will be forthcoming. Littler’s Workplace Policy Institute will continue to advise on future developments as they occur.