As most employers with employees working in California or assigned to a California location know, and as we reported in “Big Brother Just Got Bigger: Expanded Pay Data Reporting Expected to Hit the Golden State,” 2022 legislation obligated employers with 100 or more workers to report pay data via separate pay data reports to the agency now known as the California Civil Rights Department (“CRD”). Continuing that trend, in 2023 California statutes enhanced the existing pay equity rules by requiring employers to post salary ranges in job postings, and to provide the same information to their employees upon request.

With the May 8, 2024, deadline for employers to submit their 2023 pay reports quickly approaching, it is important to be aware of the recent changes to the reporting requirements implemented by the CRD. Employers should begin to collect data now and keep these key changes in mind:

• Employers must now submit information about the number of employees per each employee group who worked remotely. The CRD FAQs define a “remote worker” as “a payroll or labor contractor employee who is entirely remote, teleworking, or home-based, and has no expectation to regularly report in person to a physical establishment to perform work duties.” Hybrid workers who appear in person for any portion of time would not be considered remote workers for pay data reporting purposes.
• Employers can no longer report race, ethnicity, or sex of a labor contractor employee as “unknown.” Self-identification of these demographics is the preferred method, but if a worker declines to provide the information, an employer must still report it using (in the following order): current employment records, other reliable records or information, or observer perception.
• Unlike last year, the CRD will not be granting any deferral requests for pay reporting submissions and will strictly adhere to this year’s May 8 deadline.
• The CRD states that a labor contractor shall supply necessary data to a client employer when they “reasonably should know” that a client employer is obligated to file an employee report for the labor contractor. When a labor contractor “reasonably does not know” then they must only supply the data upon request from the client employer.

Upcoming Steps and Reminders for Employers

The reports must be submitted to CRD via their reporting portal, which can be found at pdr.calcivilrights.ca.gov/s. Employers must use the templates provided on the CRD website for their Payroll Employee Reports and Labor Contractor Employee Reports. These templates include new data points for the number of employees who (1) work on-site, (2) work remotely from California, and (3) work remotely outside of California. The CRD will not accept templates from prior years, so it is critical to ensure use of the new templates.

If not already started, we recommend commencing data collection soon as it may require a considerable amount of time and effort. When collecting data for these pay reports, employers should also assess any internal pay discrepancies that may become apparent. Should they find any, the employer should, with the assistance of counsel, conduct an analysis of the reasons behind the discrepancy to ensure there is a legitimate, nondiscriminatory basis for it, and confirmation that employees are paid within established pay ranges for their positions.

Employers should also pay attention to who must be included in their pay data reports. In addition to employees who work on-site at a California establishment, employees and labor contractors who (1) are based in a California establishment but conduct work at sites out of state, (2) do telework outside of California but are assigned to California establishments, and (3) telework inside California and are assigned to other state establishments should all be included. Compliance is key because the CRD could seek hefty civil penalties of $100 per employee, which will increase to $200 per employee for a subsequent failure to timely file a required report. The CRD is actively pursuing penalties against non-filers, and labor contractors that fail to provide data to client employers who must submit the Labor Contractor Employee Reports may be penalized as well. Further information can be found in the CRD’s updated FAQs.