The California Legislature recently passed technical reporting requirements for employers starting next year in an effort to aid targeted enforcement of various labor laws, specifically attempting to identify wage rates that appear to be discriminatory on the basis of gender or race.
SB 973 requires that, by March 31, 2021, and annually thereafter, private employers with 100 or more employees and who are required to file an annual Employer Information Report under federal law, submit a “pay data report” to the California Department of Fair Employment and Housing.
Employers covered by the provisions of SB 973 must prepare a report that identifies the 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 for each of the following job categories:
(A) Executive or senior level officials and managers.
(B) First or mid-level officials and managers.
(E) Sales workers.
(F) Administrative support workers.
(G) Craft workers.
(I) Laborers and helpers.
(J) Service workers.
In order to compile the information required, employers are required to take a “snapshot” by selecting a single pay period of their choosing between October 1 and December 31 of the calendar year preceding March 31, that counts the individuals in each of the above categories, separated by race, ethnicity, and sex.
The employer then is obligated to calculate the total earnings, as shown on the W-2 for each employee in the “snapshot,” for the entire “Reporting Year,” regardless of whether or not an employee worked for a full calendar year. The employer must tabulate and report the number of employees whose W-2 earnings during the “Reporting Year” fell within each pay band along with the total number of hours each employee worked.
The report allows for employers to include a section to provide clarifying remarks regarding any of the information provided, however, the remarks are not required. The report also needs to be prepared in a format that allows the department to search and sort the information using readily available software.
Not surprisingly, the law leaves some procedures and questions unresolved, such as if an employer should include out-of-state data, the exact format of the report, and how to calculate the total hours for exempt employees whose hours are not generally tracked.
While we await further guidance which is surely to be issued, employers may want to begin gathering pay data for calendar year 2019, focusing on the categories that must be included in the reports. If you have any questions about reporting requirements under this new legislation, please contact the experienced attorneys at RPNA Law.