California Employers: Prepare for Pay Data Reporting Deadlines

Since the passage of the 2022 Pay Transparency Act in the California Senate, employers with 100 or more workers and companies with 100 or more labor contractors that operate or hire in California have been required to comply with new requirements for Pay Data Reporting.

Looking Ahead: Pay Data Reporting Deadlines

The deadline to report your Pay Data for the reporting year 2023 is Wednesday, May 8, 2024. The deadline for filing Pay Data Reports for any reporting year will always be the second Wednesday of May the following year.

Failure to report by this date still carries some hefty penalties, including:

•  A fine of up to $100 per employee for failure to file your annual Pay Data Report
• A fine of up to $200 per employee for subsequent failures to file annual Pay Data Reports

New Updates to Pay Data Reporting

California Senate Bill 1162 (SB 1162), the Pay Transparency Act, went into effect on January 01, 2023. This included additional requirements for the California Pay Data Reporting. You can view a summary of the additional Pay Data requirements in last year’s blog: Pay Data Reporting Requirements. While most of the requirements from last year remain, a couple of important changes have been made for reporting 2023 Pay Data this year that California employers should be aware of.

These changes include new data fields added to the reporting requirement concerning remote workers and new demographic reporting requirements.

New Data Fields for Remote Workers

In addition to existing data fields, employers need to add three more fields to their Pay Data Report concerning statistics for remote workers. These new fields are:

• The number of employees who do not work remotely
• The number of remote employees in your organization located in California
• The number of remote employees outside of California assigned to a California establishment

For the purpose of Pay Data Reporting, “remote worker” refers to payroll or labor contractor employees who are entirely remote and have no expectation of regularly reporting to a physical workplace to perform their duties.

Hybrid workers or workers in other partial teleworking arrangements are not considered remote workers for Pay Data Reporting purposes.

The California Civil Rights Department (CRD) has provided updated Excel templates for Pay Data Reporting including these new fields. You will need to use these new templates to fill out Pay Data correctly.

You can download the updated templates on the CA CRD website.

New Requirements for Demographic Information

For the reporting year 2022, employers were permitted, under certain conditions, to report “unknown” race or ethnicity for labor contractor employees. For reporting year 2023, though, this is no longer permitted. Employers must seek demographic information from their labor contractors in all circumstances for Pay Data Reporting.

Besides these two updates, all of last year’s requirements are still in effect. This includes reporting workers hired through labor contractors as well as mean and median pay rates. For a comprehensive overview of last year’s reporting obligations that remain relevant this year, see our previous year’s article on California Pay Data Reporting.

When do you have to report pay data for contractors?

There has been some confusion over how to report pay data for contractors, and whether California employers really have to report pay data for every third-party contractor they employ if they meet the eligibility threshold.

The California Civil Rights Department has clarified that pay data for labor contractors only needs to be reported if the contractors are performing labor within the client employer’s usual course of business.

What does “within the client employer’s usual course of business” mean? This means the contractors are hired to do jobs that are a regular part of the company’s main business activities.

For example, if a tech company hires outside workers to take customer service calls (a duty that is part of their main business activities), they need to report how much they pay these workers. If they hire a cleaning service to clean their office, though, they don’t need to report the pay for these cleaning staff.

The CRD provides separate templates for both in-house employees and labor contractor employees. Make sure to add your contractor pay data to the right spreadsheet.

How to File Your Pay Data Report

Once you have collected the necessary Pay Data, you must submit it online to the California CRD, which remains responsible for requiring employers to collect Pay Data.

1. Log into the online submission portal for Pay Data Reporting. The CRD opened the portal on Thursday, February 1, 2024, and it will remain open until Wednesday, May 8, 2024. If you are new to the portal, you will have to register as a new user. If you used the portal last year, you can use the same login information.
2. Fill out Section I (Employer Information), such as your business’s name, address, state EIN and federal EIN.
3. Declare whether you are submitting a payroll and/or labor contractor report.
4. Complete Section II (Establishment Information and Employee Detail) by manually submitting information or uploading an Excel spreadsheet or CSV containing establishment information and employee detail information, such as job categories, race/ethnicity/sex, and pay bands. Since Pay Data Reporting requirements have been updated, you will need to use the latest available PDR template from the CRD.
5. Finalize the submission of your Pay Data Report by certifying its accuracy.

 If you employ both payroll employees and labor contractor employees, you will need to submit separate Pay Data Reports for both.

 To assist you in understanding your reporting obligations under the Pay Transparency Act for 2024, the CRD has published a comprehensive FAQ online.

Compliance With California Pay Data Reporting Laws in 2024

The Pay Transparency Act was established in 2022 to widen the scope of its 2020 Pay Data law and assist the CRD in ensuring pay equity across race, ethnicity, sex, and other protected characteristics.

While these new compliance obligations for businesses based in or operating in California can seem daunting, it’s essential for your business to take the time and make sure to report Pay Data accurately. If you’re a California-based business looking to work with a company familiar with California Pay Data requirements, Contact Us today!

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