California Civil Rights Department Issues Important Updates and Guidance on Pay Data Reporting

On February 1, 2024, the California Civil Rights Department (“CRD”) issued updated Pay Data Reporting templates, an updated FAQ on Pay Data Reporting (“FAQ”), and an updated User Guide for the CRD’s Pay Data Reporting Portal (“Portal”), all of which employers with 100 or more employees should carefully review as they begin preparing their 2023 Pay Day Reports.

What is California’s Pay Data Reporting Law?

Under California law, private employers with 100 or more employees on their payroll (or hired through a labor contractor) must annually report pay, demographic, and other workforce data about their California employees to the CRD.  According to the CRD’s FAQ, a “private employer” is any “employer that is not a government employer,” which includes nonprofits and private schools.  Religious nonprofit corporations with questions about whether they are covered by this law are encouraged to speak with counsel.  Data that must be reported includes, but is not limited to, data on employees’ median and mean hourly rate according to race, ethnicity, and gender in each job category.

Covered employers must report the required data to the CRD on all payroll or labor contractor employees assigned to an establishment in California (even if working remotely outside of California).  The FAQ explains that the CRD uses this information to “identify wage patterns” and for “effective enforcement of equal pay or anti-discrimination laws, when appropriate.”  In addition, the CRD recommends that employers assess their own pay data reports and pay practices in light of California’s anti-discrimination and equal pay laws.  To assist employers in doing so, the CRD provides employers with visualizations of their data via the online Pay Data Reporting Portal.

Annual pay data reports are always due to the CRD on the second Wednesday of May, which means the deadline for reporting on 2023 is May 8, 2024.

What’s New in 2024?

There are a few changes to this year’s reporting requirements that covered employers should review before gathering data and preparing their pay data reports.  The most notable changes are:

• Updated Templates – The CRD has updated its pay data reporting templates, which covered employers must use for submitting their reports through the CRD’s required online Portal. The CRD reports that it has refined the Portal and templates to improve user experience.  For example, in the Excel template, users can hover their cursors on a column heading to see relevant instructions.  The CRD also reports in its FAQ that the Portal will reject outdated versions of the templates from prior years, and the Portal continues to be mandatory.  The CRD will not accept reports submitted by email or hard copy.
• Reporting on Remote Workers – Covered employers must now report on the number of employees who worked remotely. For purposes of pay data reporting, “remote workers” refers to employees “who are entirely remote, teleworking, or home-based, and have no expectation to regularly report in person to a physical establishment to perform their work duties.”  This includes employees who telework from a residence outside of California but are assigned to an establishment in California.  Employees in hybrid roles or partial teleworking arrangements who are expected to regularly perform work in person at a particular establishment are not considered remote workers.
• Demographic Data for Labor Contractors Employees is Now Required – In addition to reporting on California employees who are on a covered employer’s payroll, employers with a 100 or more workers hired through “labor contractors” must file a separate report that covers those workers. A “labor contractor” is an individual or entity who supplies an employer with workers (called “labor contractor employees” by the CRD) who perform labor within the employer’s usual course of business. Covered employers with labor contractor employee reporting requirements are no longer permitted to report “unknown” for race, ethnicity, and gender of labor contractor employees.  According to the CRD, if a labor contractor employee declines to provide this information, employers must make a good-faith effort to obtain it through employment or other reliable records or information before relying on observer perceptions.

How to Prepare?

We strongly encourage covered employers to review the CRD’s User Guide, which includes detailed step-by-step instructions on submitting a pay data report using the Portal.  Covered employers should also review the CRD’s comprehensive FAQ, which contains answers to many detailed questions about reporting, such as how to report on a formerly remote worker who transitioned to a hybrid or in-person role.

Doing so should help covered employers meet their obligation to file pay data reports in a timely manner, which the CRD will be monitoring.  In fact, the CRD reports that it is actively pursuing enforcement actions against non-filers.  In such actions, the CRD may seek civil penalties of $100 per employee against an employer who fails to file a required report, with penalties increasing to $200 per employee for a subsequent failure to file a required report.

If you have any questions about whether payroll data reporting requirements apply to your workforce and, if so, how to complete the payroll data reports due by May 8, 2024, please contact our Los Angeles, San Francisco, Fresno, San Diego, or Sacramento office.