California has amended section 12999 of the Government Code to raise the penalties for employers who continue to fail to file the annual California Pay Report. Previously, employers paid penalties of $100 per employee for the first failure and a maximum of $200 per employee for each subsequent failure. The new law, Senate Bill 1237, now provides that subsequent failure to file penalties will increase up to $1000 per employee.
The higher penalty applies to more than just the main pay data report that covered employers must file. California also requires these employers to file a separate report for employees hired through labor contractors and to list the names of all labor contractors they use. The increased penalties also apply if an employer repeatedly fails to file the required labor contractor report.
As a result, while the penalties for first time failures remain the same, the change in subsequent failure penalties should not be ignored. If an employer has a large employee population that is required to be included in the annual pay report, these fines could be substantial.
The other aspect of this bill is that the civil rights department is required to publish the total number of pay data reports submitted. The department already has authority to publish aggregate reports as long as individuals’ company information is not identifiable.
These two changes go into effect on January 1st, 2027. Employers should also remember that the 2026 pay reports (that will be filed in May 2027) will include the 23 job categories that closely mirror the 23 SOC codes instead of the 10 standard EEO categories used in previous filings.
Employers required to file this annual report should begin planning how they will collect and organize their employment and labor contractor data into the new job categories now. If you need assistance with California Pay Reporting, please contact our State & Local Reporting Services team.