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SB 1162: California Pay Data Reporting Law FAQs

A look at California’s new expanded pay data reporting law and its impact on the entertainment industry.
February 17, 2024

Joseph Scudiero

EP Blog-WIDE-SB 1162 FAQs-1a

Reporting for SB 1162, California's expanded pay data reporting law, is due on May 8, 2024.

In this post, we'll answer some of the most common questions around SB 1162 and how EP can help studios and production companies stay in compliance with the new law.

What is SB 1162?

In September of 2022, California enacted Senate Bill 1162, which greatly impacts employers with at least one employee in California (see previous EP Alert here). Significantly, this law expands an existing requirement for employers to report annual demographic pay data about California employees to the California Civil Rights Department (“CRD,” formerly the California Department of Fair Employment and Housing).

Who is required to file a report under SB 1162?

The filing requirement is triggered by an employer in two ways:

  1. Having employed 100 or more employees who were directly hired by the employer during the calendar year (CRD refers to this group as the payroll employee reports), or
  2. Having employed 100 or more employees in the aggregate procured from one or more labor contractors during the calendar year (CRD refers to this group as the labor contractor employee reports).

At least one employee must work in California, even if this employee works remotely outside the State but is otherwise assigned or reports to the employer’s establishment in California. 

Because an employer may have one or both of these populations of employees, the employer may have to file a separate payroll employee report and a separate labor contractor employee report for each of these two populations. Employers that satisfy one or both of the employee population thresholds above must file with the State.

Guidance released by the CRD makes clear that the employer that hires the employees holds the obligation to file, even if payroll is performed by a third party. In the entertainment industry, this means production companies and studios are required to report because they hire the production employees.

Does my production company have to comply with the new pay data reporting law if we have not filed Federal EEO-1 reports in the past for our production worker population based on a Federal EEO-1 exception for temporary employees?

Yes. SB 1162 now requires covered employers to file pay data report(s) covering production worker employees with the State, regardless of whether the employer is required to file a Federal EEO-1 report.

How will SB 1162 impact the entertainment industry?

SB 1162 will have a major impact on the entertainment industry. As the responsible covered employer, production companies and studios will need to track talent and crew by race/ethnicity and gender, as well as track annual wage (W-2 earnings) pay across the 10 job categories.  Furthermore, SB 1162 now requires covered employers to file pay data report(s) with the State, regardless of whether the employer is required to file a Federal EEO-1 report.

What if my organization has a total of 100 or more employees, but each division or related entity has less than 100 employees?

Each employer will need to discuss this question with their own legal counsel. There is not a one-size-fits-all answer to this question. However, the CRD provided some guidance on this question in its FAQs here.

What is a “labor contractor” and why is this relevant for reporting purposes?

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. 

As explained above, employers with the requisite number of labor contractor employees must file a separate labor contractor report with the State. This separate report generally contains the same reporting requirements as in the employer’s payroll employee report and must also include certain information that identifies each labor contractor.

Employers that are required to file this separate report must obtain the demographic pay data from each labor contractor. Covered production company employers, and not the labor contractor, hold the obligation to file with the State. Furthermore, the Snapshot Period (discussed more below) that is chosen by the employer for its labor contractor report can be different from the Snapshot Period chosen for the employer’s payroll employee report.

Do I have to report on remote workers?

Yes. Employers must newly report whether employees worked remotely during the Snapshot Period:

A “remote worker” is defined as a payroll or labor contractor employee who is entirely remote, teleworking, or home-based, and has no expectation to regularly report in person to a physical establishment to perform work duties; employees in hybrid roles or (partial) teleworking arrangements expected to appear in person to perform work at a particular establishment for any portion of time during the Snapshot Period would not be considered remote workers for pay data reporting purposes.

If an employee who was remote the first six months of the year transitioned to a hybrid or in-person role during the second six months of the year, should the employee be reported in a pay data report as a remote worker?

Yes. Employers should use the Snapshot Period when determining whether to classify an employee as a remote worker or not. If an employee was expected to report in person to a physical establishment during the Snapshot Period, whether or not they work remotely at other times of the year, the employee should not be reported as a remote worker.

What are the penalties for failure to comply with this new pay data reporting law?

Starting in 2023, substantial monetary penalties apply. A civil penalty of up to $100 per employee (initial violation) and up to $200 per employee (subsequent violations) apply for any employer that fails to file the required reports. 

The CRD can also seek an order in court requiring the employer to comply with filing requirement. The CRD is entitled to recover its costs associated with seeking the order for compliance and the court proceeding would be a matter of public record.

Why does the State of California want this data?

The CRD’s stated purpose of the law is to allow the government to identify wage patterns reflecting unjustified pay inequality among the different ethnicities and genders, which in turn enables the CRD to enforce equal pay and anti-discrimination laws more effectively in California. This is expected to result in more investigations and prosecutions by the CRD against employers whose demographic pay data shows pay inequality to the CRD.

What is the deadline for filing?

Employers must file a pay data report for the prior calendar year’s data by the second Wednesday in May of each year. The filing deadline is May 8, 2024, to report 2023 pay data.

What are the reporting requirements?

SB 1162 requires covered employers to submit a pay data report each year to the CRD that covers the prior calendar year, or the “Reporting Year.” For the Reporting Year, the employer must choose a Snapshot Period, which is defined as one full pay period falling between October 1 and December 31 of the Reporting Year. The pay data report must contain the demographic pay data of California employees who were employed in that Snapshot Period (i.e., employees who were employed outside of that Snapshot Period are not included in the report even if they were employed during other periods of the same Reporting Year).

For the chosen Snapshot Period, the report must identify the number of employees by seven (7) different race/ethnicity categories and 3 gender categories across 10 different job categories. The report also must identify the number of employees by race/ethnicity and gender whose annual earnings fall within each of the 12 earnings pay ranges (referred to as “pay bands”) used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey. The employer must also calculate and include in the report the hours worked and the mean and median hourly pay rate for each group of employees in the various permutations using the categories described above.

The employer must also report on the foregoing by separating the pay data according to each of the employer’s “establishments” that has at least one California employee in the Snapshot Period. An “establishment” is defined as an economic unit producing goods or services. In the entertainment industry, examples of an establishment include, but are not limited to, a studio, a particular facility or office, or a particular production.

What if an employee declines to voluntarily provide their race/ethnicity?

If an employee declines to voluntarily provide their race/ethnicity, employers must still report the employee according to one of the seven race/ethnicity categories, using (in the following order): Current employment records, other reliable records or information, or observer perception. This method should only be used after making a good faith effort to obtain race/ethnicity information from the employee voluntarily or from other reliable records. When an employer uses observer perception, CRD encourages employers to utilize the clarifying remarks field to state they have done so, stating for example: “The race/ethnicity of [number] employees in this employee grouping is being reported based on observer perception.”

For the 2023 Labor Contractor Employee Reports, employers must report the race/ethnicity of labor contractor employees. Last year, for the 2022 Reporting Year, CRD permitted employers to report “unknown” race/ethnicity for a particular labor contractor employee in certain circumstances, but this is no longer an option for 2023 labor contractor reporting.

What if I have multiple places of business?

A multi-establishment employer must report on each of its establishments and file a consolidated report that includes each establishment.

How is the report filed with the State?

The employer must create an account on the CRD’s website to submit the data. The report must be submitted electronically using an Excel or CSV file that satisfies the CRD’s template requirements, or by answering fillable forms on the government reporting portal.

What should you do if you think you might be required to file?

You first should confirm if your company is covered by reviewing your workforce in California and nationally. If covered, you will need to determine if you can gather and report the necessary demographic and pay data across the various permutations of race/ethnicity, gender, job category, and pay bands within the template required by the CRD. To gain a better understanding of the scope of the tasks to achieve report compliance, the CRD’s FAQs about the reporting requirements are available here.

Does EP have any solutions that can help me comply with SB 1162?

Yes. EP’s digital solution tool – Diversity Management – is the only product specifically designed for the entertainment industry that can provide studios and production companies with the broad range of demographic and pay information necessary to comply with SB 1162. 

The tool allows EP clients to obtain a demographic pay data report for its productions that were payrolled by EP, with data compiled and organized in a manner consistent with the CRD’s report template, thereby substantially reducing the time and effort for clients to file their reports. 

For more information about how EP's Diversity Management solution can help your studio or production comply with SB 1162, contact us today.

Topic: Legal

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