The FAQs for California’s Pay Data requirements were updated to define contractor status with the state of California.
The FAQ defines contract as all types of agreements, regardless of what they may be called. The agreements with a contract awarding agency could be for purchase or disposal of supplies, services, or construction. There are many types of awards and contracts described further in the FAQ.
A contract awarding agency may be defined as: department, agency, board, commission, division or other unit of the state.
For more information, refer to the FAQs at this link.
For more on pay equity, visit our pay equity main page.
The FAQs have been updated on the California Pay website as of April 1, 2021. These FAQs focus on the March 31, 2021 deadline and the process for receiving a deferral of enforcement. As most of you know the deferral of enforcement granted additional time to file the CA Pay report until April 30, 2021. The FAQ updates are:
- The deadline has passed for requesting a deferral of enforcement. Requests had to be made prior to March 31, 2021. DFEH is no longer considering or granting these requests.
- If a company did not request a deferral prior to March 31st, the FAQ instructs the company to file the report immediately to avoid DFEH taking action. Such action may include DFEH seeking a court order to require a company’s compliance. DFEH reminds employers that the agency is entitled to recover costs associated with seeking the order for compliance.
Please contact your Berkshire consultant if you have questions about the CA Pay data report.
Four more FAQs were released to further explain some of the details and requirements for the upcoming California Pay Data report. Visit the California Pay Data FAQ website for details. Here is a summary of the new FAQs:
Employees who meet the definition of an employee (refer to the FAQs) and who are on leave during the snapshot period should be included in the report assuming they meet the criteria below:
- Living in California
- Working in California
- Included in a California establishment EEO-1
Employees who meet the definition of an employee (refer to the FAQs) and who report to an establishment in a U.S. territory or outside of the United States are to be included - if they meet the criteria for inclusion above and the employer is required to include them in an EEO-1. This one is very confusing because EEO-1s are only filed for the 50 states and the District of Columbia. However, some employers may include US employees who are on assignments outside of the 50 states and DC in their EEO-1 reports. If these employees meet the bulleted criteria above, then they should be included in the California Pay report.
Here is another confusing one. If an employee lives in California but physically works at an establishment outside of California they do not need to be reported. However, if the employee teleworks from California they must be included. Refer to this FAQ for more information: Should an employer’s pay data report only include their California employees or all employees?
The final FAQ deals with proxy hours for exempt employees when records are not kept of their hours. Refer to the FAQ: May an employer use the “federal proxy” for calculating the hours worked by exempt employees who do not keep records of their hours? How are employees’ total hours worked calculated?
Berkshire hosted webinar on this topic on February 9 to go over this new requirement and answer questions. Download here today!
2/17/2021 Update: CA Pay Portal is Open! Deferral Requests Can Be Requested!
The Pay Reporting Portal used to file the California Pay data report is open. The main page for the California Pay Data Reporting website can be found at this link. There are options for the portal, as well as the User Guide for navigating the portal to file a report.
Last week wrote there is an opportunity to request more time to file the 2020 report before DFEH initiates enforcement proceedings. Companies can complete an online request, found at the link above. The request must be made before the March 31, 2021 deadline. Contractors receive two emails – one an auto responder and one confirming the deferral. Once deferral is granted, the company has until April 30, 2021 to file the 2020 report.
This week, the CA Department of Fair Employment and Housing issued some new FAQs and clarified some existing questions. Refer to the FAQs for more specific information and direction on these questions about parent companies, PEOs, and HROs:
- May a parent company submit a pay data report covering its subsidiaries?
- How does an employer report employees who are entirely remote?
- A PEO usually files the EEO-1 Report for my company (“client employer” from the PEO’s perspective). Can my PEO prepare and submit my company’s California pay data report, too?
- May a PEO submit a pay data report to DFEH that covers more than one employer?
- For the EEO-1 survey, our PEO submits multiple client employers’ reports as a single combined report. Is this permissible in the California pay data reporting system?
- My company recently changed from one PEO to another PEO. Which PEO should prepare the pay data report for my company?
- If a PEO is only contracted with a portion of a client employer, would the PEO be responsible for filing a pay data report for the entire client employer?
- My company is an HRO and we process payroll for a number of clients – both under our FEIN as well as under the clients’ FEINs in some circumstances. We have many smaller clients (below the 100 employee threshold) that we process payroll for under our (the HRO’s) FEIN. Is our HRO required to file for any of our clients?
An important note from Berkshire about reporting employees as non-binary for this report:
If your company collects information on the three categories for gender recognized by California – male, female, and non-binary, then you must report employee data in these three categories on the California Pay report. Employee self-identification should drive the reporting, however, self-identification is voluntary. If an employee declines to self-identify sex, this does not mean that they should automatically be reported in the non-binary category. In other words, unknown or declined to self-identify does not automatically translate to non-binary. Further research should be done to identify the appropriate category using the suggestions provided:
- Employee self-identification is the preferred method of identifying sex information.
- If an employee declines to state their sex, employers must still report the employee according to one of the three sex categories, using current employment records or other reliable records or information such as an employee’s own pronoun.
DFEH issued the following updates last week. Many employers have the common question about how to report employees who choose not to identify race/ethnicity or sex. Employee self-identification is the preferred method and is consistent with EEOC’s instructions for the EEO-1. The revised FAQs indicate the following suggested actions for this situation:
Employers must report employees in one of the seven identified race/ethnicity categories. If an employee declines to self-identify race or ethnicity the employer should use the following (in this order):
- Current employment records
- Other reliable records or information
- Observer perception
The instructions are similar for identifying sex to be reported. All employees must be reported in one of the three categories recognized by California law – male, female and non-binary. If an employee declines to self-identify the guidance is:
- Use current employment records
- Other reliable records such as an employee’s own pronoun.
Finally, the FAQs defined “private employer”. This is an employer who is not a government employer regardless of whether they are a publicly-traded company. Refer back to the description of what companies must file the report if there are other questions about whether your company should file the California Pay Report, and stay tuned for further updates on this evolving topic.
Berkshire hosted webinar on this topic on February 9 to go over this new requirement and answer questions. Download here today!
California DFEH posted an important update to the FAQs on their website this week. The FAQ provided details for employers who would like to request an extension to the filing deadline. The FAQ states that if a report is not received by March 31, 2021 DFEH may seek an order to require the employer to comply, and recover associated costs. However, citing the COVID-19 pandemic and the fact that the reporting is newly required, DFEH will consider an employer’s request that DFEH delay seeking the order for compliance. This is similar to how EEOC handled extensions in past years when the due date could not be changed. Employers were told that they would not be cited as late if they filed by the [future] date provided.
Employers must fill out an online request before March 31, 2021, provide the reason for the request and other related information. The enforcement deferral period will allow the employer until April 30, 2021 to file the report.
Employers must request the deferral; DFEH will not consider requests made by a third party on behalf of the employer. The form will be available by February 16, 2021 on the pay data website at this link – the same day the reporting portal is promised to open. DFEH warns that this deferral may be a one-time event and not to expect a delay option in future years. Berkshire urges any company who believes that they need additional time to prepare for this report to seek the delay. Please alert your Berkshire consultant if an extension is requested.
February 2021 Update:
California Department of Fair Employment and Housing (DFEH) published the promised data templates on February 1st for employers to use to develop the required report. A detailed User Guide was also published to guide companies in using the templates to upload or manually enter data into the Reporting Portal to open by February 16, 2021.
The data templates provide detail on the formatting for the .csv and Excel files that can be used for upload and there are instructions detailing data submitted in the files and codes to be used. These templates can be downloaded from the DFEH website at this link.
There are a few details that appear in the templates that were not mentioned in the FAQs or may have been overlooked in the FAQ section entitled What information must be contained in the pay data report? The fields listed below are information required for the Company, however, not all are required fields:
- Employer name, address, city, state, country code and zip code
- Employer information as filed with the California Employment Development Department (EDD). This may be different from the company name used for EEO-1 reports
- Employer CA SEIN – The California Employer Identification Number provided by EDD
- Employer's Ownership; Affiliation; or Enterprise
- If yes - if employer is owned or affiliated with another company, or there is centralized, integrated or similar ownership, control, management or compensation (such as the same management personnel or central control of personnel policies, stock plans and/or labor relations) between a group of separate FEINs
- Parent company information if the answer above is Yes
- Including the parent company’s country
- Affiliated FEINs - If employer is affiliated with another company or companies or is part of an enterprise, enter the FEIN of all related companies
Additionally, the template asks if an EEO-1 report was filed last year for each establishment. Since the 2019 and 2020 EEO-1s have not been filed and will not be filed before March 31st, the answer would seem to be No for every establishment, at least for the initial submission.
Finally, DFEH published more updates to the FAQs. One update addresses what section of the W-2 to use if an employee’s earnings are not reported in W-2 Box 5, for example, if the employee is a H-2A visa holder. In this case W-2 Box 1 earnings are used and notes should be placed in the remarks field for the establishment.
The FAQ updates also cover Professional Employer Organizations (PEO) and mergers, acquisitions and spinoffs. The questions and answers are summarized below. The full FAQ is available at this link.
- A PEO may file the California Pay Data report for an employer, however, the client employer must certify the accuracy of the report.
- A PEO may not submit a pay data report covering more than one employer.
- In the section on mergers, acquisitions, and spinoffs, DEFH provides scenarios describing how reporting can be handled for employees before and after a merger or an acquisition.
Berkshire will continue to follow this developing activity.
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 identifier
- 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 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:
- $19,239 and under
- $19,240 – $24,439
- $24,440 – $30,679
- $30,680 – $38,999
- $39,000 – $49,919
- $49,920 – $62,919
- $62,920 – $80,079
- $80,080 – $101,919
- $101,920 – $128,959
- $128,960 – $163,799
- $163,800 – $207,999
- $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.