What We Know About California Pay Data Reporting

Berkshire has been following the progress of the California Pay Report since its enactment in Septem...



Posted by Cindy Karrow, SPHR, SHRM-SCP, Managing Consultant on January 20 2021
Cindy Karrow, SPHR, SHRM-SCP, Managing Consultant
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Berkshire has been following the progress of the California Pay Report since its enactment in September 2020. Since the EEOC suspended the collection of pay information using the EEO-1 report, also known as Component 2, California enacted Senate Bill 973 (SB 973) to continue the collection of similar information for certain employers.

To date, the Department of Fair Employment and Housing (DFEH) has made updates to their lengthy Frequently Asked Questions page and made an announcement about their portal and assistance to be provided.

In enacting this legislation, the California Legislature found that “[d]espite significant progress made in California in recent years to strengthen California’s equal pay laws, the gender pay gap persists, resulting in billions of dollars in lost wages for women each year in California."

The law seeks to help employers rectify the persistent issue of wage gap between women and men. The legislation states that "Although there are legitimate and lawful reasons for paying some employees more than others, pay discrimination continues to exist, is often ‘hidden from sight,’ and can be the result of unconscious biases or historic inequities.”

The California Pay Data Reporting law will affect employers in different ways, depending on their number of employees who live in, work in, or report to others who live and work in California.

Below is a consolidated summary of information we have gleaned since September 2020. Some previously provided information has been updated, and we will continue to post new updates here as we learn more about this new requirement.

Who must file?

  • All employers who have 100 or more employees inside and outside of California, and,
  • Who are required to file the EEO-1 report, and,
  • Who have at least one employee assigned to work at an establishment in California, or,
  • Who have at least one employee who lives in California (including remote workers)

What is the filing deadline for the first report? The deadline remains March 31, 2021 and this will be an annual report. The Data Submission Portal will open February 15, 2021.

Will individual employee data be reported? No, companies will tabulate or aggregate the required information. If a company has multiple establishments to be reported, each will be reported individually. In the latest update on 1/15/2021, multi establishment employers are no longer required to include a company consolidated report with their filing. FAQs have been updated to reflect this important change.

What date or dates should be used to pull employee data for the report? Companies may pick a single pay period between October 1 and December 31 of the year to be filed. For example, the report to be filed by March 31, 2021 should be pulled from a pay period between October 1, 2020 and December 31, 2020.

What data should be pulled to create the report? Berkshire suggests the following data elements for each employee included in the report to assist the company in compiling the establishment reports:

Employee information:

  • Employee identifier
  • Race
  • Sex (including male, female and non-binary)
  • EEO-1 Category of the job held by the employee
  • Work Location
  • EEO-1 Unit/Establishment Number (assigned by the EEOC if available)
  • Report Location – if different from work location
  • W2 Box 5 earnings for 2020 – used to assign each employee to a Pay Band
  • Hours worked in 2020
  • Paid time off hours in 2020 (Hours worked and paid time off hours will be consolidated)

Establishment information – for each establishment to be reported:

  • Establishment Name
  • EEO-1 Unit/Establishment Number (assigned by the EEOC if available)
  • Address, City, State, Zip Code
  • North American Industrial Classification System (NAICS) code – designates major activity

Company Information:

  • Company Name
  • Address, City, State, Zip Code
  • Headquarters address if different from Company address
  • North American Industrial Classification System (NAICS) code
  • Federal Employer Identification Number/Tax Identification Number (FEIN/EIN)
  • Dun and Bradstreet Number (DUNS)
  • Is company a contractor with the state of California
  • If applicable – Name and Address of the employer’s Parent Company/Companies

What employee types should be included in the reports? Full-time and part-time employees are to be included. This includes employees on paid or unpaid leave. The FAQ explains further:

Government Code section 12999(m)(1) defines “employee” to mean “an individual on an employer’s payroll, including a part-time individual, whom the employer is required to include in an EEO-1 Report and for whom the employer is required to withhold federal social security taxes from that individual’s wages.”

If an employee is included in the data pulled for the pay period but terminates before the year end, must their data be included in the report? Yes, if they were employed during the pay period.

What will the format for the reports look like? DFEH has not published the file template that must be used for electronic submission, however, they announced that it will be available by 2/1/2021. FAQ information indicates the format for the template closely resembles EEO-1 Component 2 “grid," however, there are substantial differences.

The DFEH now states that no EEO-1 Report filed with EEOC for Reporting Year 2020 will satisfy their requirements. In the EEO-1 Component 2 Report, each EEO-1 category was broken into pay bands and employee counts were provided by sex and race category. Then the same formatting was used to report hours worked by EEO-1 category/pay band, sex and race category.

Once the data submission portal is open the required file may be submitted in either Excel or .CSV format. The portal will also offer a fillable form for companies who prefer to enter the data directly into the system instead of submitting an electronic file.

Can we report total headcount rather than using the grid format for establishments with less than 50 employees as we do for EEO-1 reports, known as Type 6 reports? No, all establishments must be filed using the grid format showing employee counts and hours in the appropriate cells.

Are the pay bands used by California the same as those that were used for EEO-1 Component 2? Yes, for the 2020 report. The pay bands originate from the U.S. Bureau of Labor Statistics and they are:

  1. $19,239 and under
  2. $19,240 – $24,439
  3. $24,440 – $30,679
  4. $30,680 – $38,999
  5. $39,000 – $49,919
  6. $49,920 – $62,919
  7. $62,920 – $80,079
  8. $80,080 – $101,919
  9. $101,920 – $128,959
  10. $128,960 – $163,799
  11. $163,800 – $207,999
  12. $208,000 and over

 

What race/ethnic categories are to be reported? Use the categories identified in the EEO-1 Instruction Booklet.

  • Hispanic or Latino - A person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin regardless of race.
  • White (Not Hispanic or Latino) - A person having origins in any of the original peoples of Europe, the Middle East, or North Africa.
  • Black or African American (Not Hispanic or Latino) - A person having origins in any of the black racial groups of Africa.
  • Native Hawaiian or Pacific Islander (Not Hispanic or Latino) - A person having origins in any of the peoples of Hawaii, Guam, Samoa, or other Pacific Islands.
  • Asian (Not Hispanic or Latino) - A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian Subcontinent, including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam.
  • Native American or Alaska Native (Not Hispanic or Latino) - A person having origins in any of the original peoples of North and South America (including Central America), and who maintain tribal affiliation or community attachment.
  • Two or More Races (Not Hispanic or Latino) - All persons who identify with more than one of the above five races.

What gender/sex categories are to be reported? California officially recognizes three genders: female, male, and nonbinary. Although the final form is not available, DFEH anticipates the report will provide three genders.

 

How should the hours worked and hours of paid time off be calculated?

  • For non-exempt employees use timesheets or other records to calculate hours actually worked in 2020 and hours paid time off (vacation, sick, or holiday time).
  • For exempt employees use timesheets or other records to calculate hours actually worked in 2020 and hours paid time off (vacation, sick, or holiday time), if such records are maintained
  • If there are no such records for exempt employees, use a proxy:
    • Add the number days actually worked plus the number of days of paid time off (vacation, sick, or holiday time) for each exempt employee during the reporting year.
    • Multiply by the average number of hours worked per day by the exempt employee

Will companies be required to include employee counts for employees who do not live or work in California? Possibly. The FAQs state that if an employee works outside of California but is assigned to a California establishment, their counts must be included in the report. It has widely been interpreted that employees outside of California who report to a manager or supervisor in a California establishment should be included in the counts. DFEH provides employers with the option to include all employees in the reports.

If our company does not have 100 employees but we are owned or affiliated with another company and together there are a total of 100 or more employees, do we have to file a report? Possibly. Refer to the EEO-1 Instruction Booklet.

If our organization files EEO-3, EEO-4 or EEO-5 report but not EEO-1, must we file the CA Pay Report? No

Is there a system through which companies must submit their reports? DEFH recently announced that the Data Submission Portal will be available on February 15, 2021. A User Guide and data template will be available by February 1, 2021.

Where can I find more information? The DFEH website address is: https://www.dfeh.ca.gov/paydatareporting

If you have specific questions, please contact your consultant or email us.

Cindy Karrow, SPHR, SHRM-SCP, Managing Consultant
Cindy Karrow, SPHR, SHRM-SCP, Managing Consultant
As a Managing Consultant, Cindy Karrow, SPHR, SHRM-SCP specializes in developing AAPs, acting as liaison with the OFCCP, and delivering customized training.

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