California Pay Data Reporting
CA Pay - Enforcement Deferral for Labor Contractor Report!
On April 14, 2023 the California Civil Rights Department (CRD) published a notice in their FAQs stating on Tuesday April 18, 2023 they will begin accepting “enforcement deferral requests” from employers for their Labor Contractor Employee Reports that are due May 10, 2023.
CRD is not changing the due date for the report. However, if a deferral is granted by CRD, the agency will delay seeking a court order until after July 10, 2023 for an employer who does not file its Labor Contactor Employee Report by May 10th.
CRD will only accept deferral requests through the portal, therefore, employers who wish to seek the deferral MUST be registered with the CA Pay Portal https://pdr.calcivilrights.ca.gov/s/. Employers must complete and submit a deferral request form by May 10, 2023. No other form of request will be considered including those made by a third party on behalf of the employer.
NOTE: this deferral only applies to the Labor Contractor Employee Reports filed by (client) employers; there is no deferral period for the Payroll Employee Reports which are due by May 10, 2023.
Berkshire encourages you to continue to work with your labor contractors to provide you with the required data. We recommend you seek enforcement deferral if you anticipate delays in receiving data from labor contractor employers.
The website for California Pay Data reporting has provided a few updates that will be of interest to companies asking for more clarification on several topics. These new FAQs can be found on the California Pay Data FAQ page and are noted as having been updated 2/22/2023. The following questions have been updated:
- May a parent company submit a pay data report covering its subsidiaries? (updated 2/22/2023)
- What is “labor . . . within the client employer’s usual course of business,” such that workers performing that labor are “labor contractor employees” who must be reported on? (new 2/22/2023)
- Because a labor contractor may not know whether any client is obligated to file a Labor Contractor Employee Report, is a labor contractor only required to provide data to a client employer upon a client’s request for the data? (new 2/22/2023)
- At times, labor contractors act as prime contractors and use subcontractors to help meet their clients’ staffing requirements. For purposes of pay data reporting, is the prime contractor also a “client employer” required to file a Labor Contractor Employee Report? (new 2/22/2023)
- If a labor contractor uses a subcontractor to supply employees to a client employer, is the prime labor contractor or its subcontractor required to provide the client employer with the data needed to complete its Labor Contractor Employee Report? (new 2/22/2023)
- If a labor contractor uses a subcontractor to supply employees to a client employer, should the prime contractor and the subcontractor merge their data, or should the client employer merge the prime contractor’s and subcontractor’s data? (new 2/22/2023)
- Should a labor contractor, when filing its own Payroll Employee Report, assign employees to its own establishment(s) or the establishment(s) of the client employer? (new 2/22/2023)
- Should a labor contractor use the client employer’s establishment when providing the necessary data for the client employer’s Labor Contractor Employee Report? (new 2/22/2023)
- I don’t file EEO-1 Reports, but instead file other types of reports with the federal government. Does that mean I do not need to file a pay data report with CRD? (updated 2/22/2023)
- Do private colleges and universities need to file a Pay Data Report? (new 2/22/2023)
Berkshire will continue to follow the CA Pay Data Reporting site and will and alert you to further updates as they are made available.
2/3/2023 Update - Companies Receiving Emails From California Civil Rights Department:
Companies are beginning to receive emails from California Civil Rights Department that reads as follows:
As an employer with 100 or more U.S. employees (with at least one employee in California), you are required to file an annual Pay Data Report with the California Civil Rights Department under California Government Code, section 12999. Section 12999 was amended in 2022 by Senate Bill-1162 to further require private employers with 100 or more employees hired through labor contractors to submit a separate Pay Data Report to the Department for those employees.
You must file your report online at: https://calcivilrights.ca.gov/paydatareporting/. The portal to report pay data for the 2022 reporting year opened on February 1, 2023. Pay Data Reports for reporting year 2022 must be filed no later than May 10th, 2023.
You can learn more about these reporting requirements and how to file your Pay Data Report at our web site, which provides FAQs on the pay data reporting process, a User Guide to our portal, user templates, and other resources: https://calcivilrights.ca.gov/paydatareporting/. If you have further questions after reviewing those resources, you can always contact us at email@example.com.
The CRD Employer Pay Data Team
The first step a company should take is to ensure that they meet the requirements for filing the 2022 Pay Data reports. Please review previous blog posts to ensure your company meets the threshold for filing the Payroll Employee Report and/or the Labor Contractor Employee report and check out the FAQs on the CA CRD website.
The templates to be used for the Payroll Employee Report and the Labor Contract Employee report are now available on the California Pay Data Reporting website. Users may choose an Excel version or a .csv version. The templates have sample data in them.
California CRD updated their website and published the new version of the User Guide for the 2022 filing period. Use can download the new User Guide on the California Pay Data Reporting website.
The Guide contains a lot of detailed information, much of which is also found in the site’s FAQs. Importantly, filers will find within the User Guide and FAQs more details about Labor Contractors, who must file the separate Labor Contractor reports, and examples of various scenarios.
The Employee report and the Labor Contractor report are separate and will be filed separately in the CRD portal if the private employer is required to file both reports. Employers and their labor contractors may select a different snapshot period across all their labor contractors, although CRD recommends selecting the same snapshot period for everyone.
The Excel and .csv template examples have not been updated yet; however, the User Guide contains charts showing the data requirements and layouts for both reports.
Watch this blog for more updates as they become available.
1/23/2023 Update - Website Updates and New FAQs:
We have received word from California Civil Rights Department (CRD) about the California Pay Data Reporting for the 2022 filing season. In previous blogs we mentioned some changes to the employee data report, as well as a separate report that some employers must file if they have used temporary or contract workers during 2022. The changes described below are a result of Senate Bill 1162 which became effective January 1, 2023 and affects the 2022 report. CRD has updated their website and FAQs. Some of their updates are still pending. Below are highlights of some of the changes:
Who must file?
- Private employers of at least 100 employees must file the Payroll Employee Report (the traditional employee report) regardless of whether the employer is required to file an EEO-1 report. This is a change from previous requirements.
- Private employers (also called Client Employer) with 100 or more employees hired through labor contractors (with at least one in California) within the prior calendar year are required to file a Labor Contractor Employee Report covering the employees hired through labor contractors in the prior calendar year. This is a new requirement for the 2022 report.
- Labor contractors are required to provide the necessary data and information to the employer.
- Both reports must include the mean and median hourly rate for each of the groupings on the report. A grouping is comprised of Establishment, EEO-1 category, race/ethnicity, sex, and pay band. This is a new requirement for the 2022 report.
- Employers may not submit an EEO-1 report to satisfy the reporting requirements.
- The deadline for filing changed from March 30th to the second Wednesday of May each year. The 2022 reports are due May 10, 2023.
Client Employer – A private individual, entity, or other person as defined by Government Code section 12925 (including one or more entities acting in concert) that has workers hired through labor contractors.
Employer – A private individual, entity, or other person as defined by Government Code section 12925 (including one or more entities acting in concert) that is obligated to file a Payroll Employee Report and/or a Labor Contractor Employee Report.
Employee or Payroll Employee – An individual on an employer’s payroll, including part-time individual, for whom the employer is required to withhold federal social security taxes from that individual’s wages.
Labor Contractor – An individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.
Labor Contractor Employee – An individual on a labor contractor’s payroll, including a part-time individual, for whom labor contractor is required to withhold federal social security taxes from that individual’s wages, and who performs labor for a client employer within the client employer’s usual course of business.
Other significant changes resulting from Senate Bill 1162 :
- In past reports employers were allowed to report all employees on the report if it was easier for them. The revisions for 2022 indicate that employees who are working outside of California and are assigned to an establishment outside of California should not be included in the report. Note: single establishment employers who are located in California will still include all employees because all employees are assigned to a California establishment.
- Certain employers must include pay scales on job postings. See our blog from January 17, 2023 for details about the posting requirements.
- The format for the Payroll Employee Report and the Labor Contractor Employee Report are nearly identical, however, the Labor Contractor Employee Report must identify the Labor Contractor for each grouping/line of data.
- Penalties were added for employers who fail to file the required reports. CRD may seek civil penalties of $100 per employee against an employer for failure to file with an increase to $200 per employee for a subsequent failure to file. Labor contractors who fail to provide the necessary data to the client employer may also be assessed these penalties. CRD may add the cost of enforcement action to the penalties assessed.
Berkshire continues to review the requirements established by SB 1162 and its implications for our clients. We will keep you updated.
1/17/2023 Updated Guidance on Pay Transparency in California:
Authored by Dr. Thomas Carnahan and Allegra Hill
On January 1st, 2023 California’s Pay Transparency Bill 1162, which requires that employers with 15 or more employees disclose their pay ranges in job postings, went into effect. This bill also enhanced the pay reporting requirements (see below for more information on what we know about current pay reporting in CA). The Labor Commissioner’s office updated their FAQs pages to provide some additional guidance on the pay transparency portion of the law. Below is a summary of the main FAQs.
Covered Employers: Employers with 15 or more employees are required to disclose their pay ranges in job postings. The bill does not state how an employer should be counting their employees. The Labor Commissioner’s guidance is that the calculation of the number of employees should be consistent with how an employer counts employees for the 2022 COVID-19 Supplemental Paid Sick Leave (SPSL). At least one employee must be currently located in California.
Covered Positions: In addition to positions to be filled in California, if the position may ever be filled by someone who either works in-person or remotely from California, the job posting must include the pay scale. In addition, an employer cannot avoid this requirement by using a third party to post or recruit for the role; the third party must include the pay range on its job postings.
How to Post: The new FAQS also prohibit a practice some employers had adopted to address the growing number of pay transparency requirements. The FAQs prohibit an employer from using a link or QR code to provide the salary range. Per the FAQs, the pay scale must be included within the job posting.
Pay Scale Requirements: Currently defined as the “salary or hourly wage range that the employer reasonably expects to pay for the position”. The Labor Commissioner’s guidance clarifies that any “compensation or tangible benefits provided in addition to a salary or hourly wage are not required to be posted.” However, if a position’s pay scale is based on a piece rate or commission, then the piece rate or commission range should be included in the job posting.
Violations: Employers who are found to have violated this law will be subject to civil penalties of no less than $100 and no more than $10,000 per violation.
SB1162, signed into law in late September 2022, expanded the previous pay reporting requirements under the California Pay Data report. Since then, the California Civil Rights Department – CRD (formerly known as the California Department of Fair Employment and Housing – DFEH) has not released data specifications for the upcoming Pay Data Report for the 2022 reporting period. However, these reports will be due by May 10, 2023. We know that there will be additional fields in the report for the median and mean hourly rates for each job category and combination of race, ethnicity, and sex.
One item of concern for many employers is the addition of a separate report for contracted employees. According to the amendments in SB-1162, private employers with 100 or more employees hired through labor contractors must submit a separate pay data report covering workers hired through labor contractors. This report must also disclose the ownership names of all labor contractors used to supply employees. Labor contractors must supply all the necessary pay data to the private employers.
A labor contractor is defined as: an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.
Labor contractors who are unable to supply the necessary reports to an employer may also be assessed penalties.
California Employers Taken to Court
And what of the previous Pay Data Report requirements? CRD began taking employers to court in 2022 for not filing the required Pay Data reports. The California Pay Data website links to various press releases relating to the California Pay Data report under the “Pay Data in the News” section.
Most notable are the press releases highlighting CRD filing suit against the first two employers: Michaels Stores (May 3, 2022) and JPMorgan Chase Bank N.A. (June 15, 2022). Both companies failed to file their 2020 and 2021 CA Pay Data reports until CRD took action against them.
The penalty for not filing the report is not to exceed $100 per employee. If there is a subsequent failure to file, the penalty raises to a cap of $200 per employee.
Michaels has over 100 stores in California and JPMorgan Chase Bank N.A. has over 900 bank branches in California. Both companies entered into agreements with the Department and filed the overdue reports. Michaels will pay CRD $6850 in fees and costs and JPMorgan Chase Bank will pay $16,698 in fees and costs.
Berkshire is closely following California Pay Data developments and will continue to provide updates on our blog as they become available.
For support in filing your California Pay Data reports, email Berkshire today.
In 2020, California became the first to roll out an ambitious pay reporting structure with the passage of Senate Bill 973 (SB 973), which requires certain employers to file annual reports detailing the compensation and hours worked by employees in each of the current EEO-1 job categories. The reports are filed annually with the California Civil Rights Department (CRD), formerly called the Department of Fair Employment Housing (DFEH).
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 next annual report? Until recently, these reports were due by April 1 of each year. The new deadline is the second Wednesday of May each year.
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. Multi-establishment employers are not required to include a company consolidated report with their filing.
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.
What data should be pulled to create the report? The Pay Data report is like the EEO-1 Component 2 report which was required by EEOC in 2017 and 2018 and then discontinued. Aggregated employee demographic (sex, race and ethnicity), pay band and hours information is supplied by EEO-1 job category for each covered establishment. Beginning in 2023, employers will also need to report the the median and mean hourly rate within each job category, for each combination of race, ethnicity, and sex, and some employers will also need to gather information related to workers supplied by labor contractors.
Although these requirements may change as we learn more about the recently-expanded pay data requirements, Berkshire suggests employers collect the following data elements for each employee to be reported:
- 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 relevant reporting year – used to assign each employee to a Pay Band
- Hours worked in relevant reporting year
- Paid time off hours in relevant reporting year (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 requested but not required
- Is the 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 report? Full-time and part-time employees are to be included. This includes employees on paid or unpaid leave. An FAQ issued by the California Civil Rights Department defines “employee” (for purposes of pay data reporting) 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 any temporary worker provided by a staffing agency or any independent contractor meets this definition of “employee,” then that individual is counted.”
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 selected pay period.
What will the format for the reports look like? The most recent file templates can be found on the DFEH website at this link. There are examples in both .csv or Excel format. The portal also offers fillable screens for companies who prefer to enter the data directly into the system instead of submitting an electronic file.
What are the pay bands used by California Pay Data Reporting? The pay bands are those used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey. For the pay data report filed in 2022, the pay bands were as follows:
- $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 same 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.
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 and hours paid time off (vacation, sick, or holiday time) in the year to be reported.
- For exempt employees use timesheets or other records to calculate hours actually worked year and hours paid time off (vacation, sick, or holiday time) in the reported year , 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
If our organization files EEO-3, EEO-4 or EEO-5 report but not EEO-1, must we file the CA Pay Report? No
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.