Changes to California Pay Reporting Requires Employers & Labor Contractors to Act

On October 13, 2025, Governor Gavin Newsom signed Senate Bill 464 into law changing the way employers annually report pay data to the State of California and imposing stricter penalties on employers who do not comply with the mandatory reporting requirements. The changes will be rolled out in 2026 and 2027, with the most cumbersome change starting in 2027.  

The 2026 changes focus on data storage requirements and mandatory penalties for failure to submit the required pay data reports. Starting in 2026 employers and labor contractors must store any demographic data collected separately from employees’ personnel records. While many employers already take such precautions, employers should audit their recordkeeping practices to ensure compliance.  

In addition, if the California CRD (Civil Rights Department) requests penalties to be levied against employers or labor contractors who fail to file, the courts are now mandated to enact the fines. The fines have not changed in monetary value ($100 per employee for the first failure and $200 per employee for any subsequent failure) but these can add up quickly, especially for large employers inside of California. We encourage employers and labor contractors to file these reports on time and accurately to mitigate the risk of these penalties.  

Starting in 2027, we see the continuation of these changes but also a big shift in the data reporting itself. Previously, pay data was gathered and reported using EEO-1 category as one of the aggregate data points along with race, sex, and pay band. The CRD will now use the 23 SOC (Standard Occupational Classifications) codes in place of the 10 standard EEO-1 categories. This will require employers to identify the correct SOC code for all jobs that will appear in their CA Pay reporting. Depending on the size of an employer, this could be a large task to complete as it goes beyond the typical EEO-1 job categories which most companies are familiar with. We encourage employers to begin planning now for how they will start to integrate these SOC codes in the necessary data for the reporting process in 2027.  

The CRD has yet to release any new templates or instructions on how these changes will affect the final versions of the data that needs to be collected. Berkshire is monitoring these developments and will share additional information as it is released. In the meantime, clients should continue to plan to file these required pay data reports using the current format for the 2026 filing period. Berkshire can also help employers plan for the new SOC code reporting requirements. If you are new to using our California Pay services and are interested, you can request more information from our State & Local Reporting Services team.