California Pay Data Reporting Law Updates and Resources
This post provides general information that is not intended to be legal advice. Consult with your labor counsel about your specific situation to determine how this law applies to you.
California recently made significant revisions to the State's pay wage reporting requirements. Below, we'll discuss the changes that came on the heels of the most recent legislation, SB 1162, which became effective on January 1, 2023.
A brief history of California pay data reporting legislation
In 2020, California enacted Senate Bill 973, which affected private employers of 100 or more employees that are subject to federal Employer Information Report (EEO-1) filing requirements. Eligible employers were required to submit an annual pay data report to the California Department of Fair Employment and Housing, now called the California Civil Rights Department (CCRD).
In September 2022, California Governor Gavin Newsom signed SB 1162 into law, which both amends and expands upon the data reporting requirements that became law in 2020. The law applies to all employers that had 100 or more nationwide employees during the prior calendar year being reported on (i.e., the Reporting Year), where at least one of its employees worked in California (whether physically or remotely reporting to an employer’s establishment in California).
What changed with the passage of SB 1162
- More employers are now required to file pay data reports.
When SB 973 passed, annual pay data reporting requirements were dependent, in part, on whether the employer was subject to federal EEO-1 reporting. However, with the passage of SB 1162, pay data reporting requirements now apply to all private employers with 100 or more employees nationwide that have at least one employee working in or reporting to an employer’s establishment in California, regardless of federal EEO-1 filing obligations.
- Employers must now file reports for eligible direct hire and labor contractor employees. SB 973 was originally construed to require employers to file reports for direct-hire employees only. However, SB 1162 now additionally requires employers to report on employees that are received by the employer through “labor contractors.” A “labor contractor” is “an individual or entity that supplies a client employer with workers to perform labor within the client employer’s usual course of business, with or without a contract.”
Employers that meet the reporting obligation criteria for direct-hire employees and temporary employees must now file two separate reports: (1) a payroll employee report, which provides data on direct-hire employees; and (2) a labor contractor report, which provides data on workers who provide contingent labor services.
- Monetary civil penalties are now on the table.
With SB 973, the State was able to seek a court order to require non-compliant employers to file a pay data report. Now, with the passage of SB 1162, employers (studios, production companies, etc.) face financial penalties of up to $100 per employee for an initial violation of California’s pay data reporting law and up to $200 per employee for subsequent violations. Penalties may be imposed on any employer that is required, but fails, to file a pay data report by the annual filing deadline.
- Employers must provide more detailed pay data.
SB 973 required employees to report annual wages, annual hours worked, and “pay band” data. SB 1162, however, expands on this by requiring employers to report mean and median hourly rates for each combination of sex, ethnicity, and race for different job categories, in addition to annual wages, annual hours worked, and “pay band” data.
SB 1162 report overview
Here’s a broad overview of how wage reporting works. Eligible employers must:
- Define a "Snapshot Period"
Select a pay period that falls between October 1 and December 31 of each reporting year. The "Reporting Year" is the calendar year the employer reports on – e.g., on May 8, 2024, data will be filed for the 2023 Reporting Year.
- Gather pay and demographic data.
Compile data for workers who were employed in California (or assigned to an employer’s establishment in California) during the “Snapshot Period.” The report includes each eligible worker’s job category, race/ethnicity, gender, annual hours worked, and annual earnings (from the employee’s W-2 box 5 - Medicare wages and tips), as well as details on which “establishment” the employee works for. An “establishment” is “an economic unit producing goods or services.” Production world examples include a studio division, production or production entity.
- Assign workers to appropriate categories.
Job category (10 options), race/ethnicity category (7 options), gender category (3 options), and pay band (12 options). Examples of job categories include executive or senior level officials and managers, technicians, craft workers, and laborers and helpers.
Examples of races and ethnicities include White, Hispanic or Latino, Asian, and two or more of the above (but not Hispanic or Latino). Gender options are male, female, or non-binary. Pay bands increase incrementally, starting with $19,239 and under, and ending with $239,200 and over.
- Do the math. Calculate and record mean and median hourly rates by job category.
After following these steps, employers should be ready to submit an aggregate report showcasing how employees are compensated based on job category and demographic information.
2024 filing deadline
Employers must file a pay data report for the prior calendar year’s data by the second Wednesday in May of each year. This year’s filing deadline is May 8, 2024.
The State of California has created mandatory report templates in Excel or CSV for employers to use to build their report. Once complete, the report will be electronically filed through the State's web portal.
Learn more about SB 1162
As with any legislation, it’s important to understand the different nuances and variables that impact the application of the law.
Here are two great SB 1162 resources to help get you started:
- Check out our SB 1162: Pay Data Reporting Law FAQ’s
- Watch our Master Series webinar: What Studios Need to Know About California's New Pay Data Reporting Law.
Let EP help you simplify pay data reporting
EP's Diversity Management solution provides studios and production companies with the ability to interpret the broad range of demographic and pay information needed to comply with SB 1162. Our solution maps each employee's occupation to the State's job category codes; organizes wages into the designated pay bands; codes employees into SB 1162 gender and ethnicity designations; and calculates employee wages using W-2 box 5 earnings as well the mean and median hourly rate and annual hours worked for each combination of sex, ethnicity, and race for different job categories.
To learn more, visit our SB 1162 page, or click the green 'Contact Us' button to get in touch with our team today!