CA Expands Pay Data Reporting Starting with 2026 Reporting Year
California started requiring private employers in California with 100 or more employees to annually report demographic pay data to the state’s Civil Rights Department in 2021 (discussed here) and expanded the reporting requirements in 2022 (discussed here). Now, with Senate Bill 464, CA significantly expands the reporting requirement again, which takes effect in the 2026 Reporting Year for which reporting is due in May 2027.
As a short recap, the pay data report must contain the demographic pay data of California employees who were employed in a Snapshot Period (which is defined as one full pay period to be chosen by the employer, falling between October 1 and December 31 of the Reporting Year). And for the chosen Snapshot Period, the report must identify the number of employees by seven different race/ethnicity categories (with the addition of Middle Eastern North African (MENA) in the future) and three 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 12 earnings pay ranges (referred to as “pay bands”). The categories result in multiple cohorts of people, and the mean and median hourly pay rate must be calculated for each cohort.
By the second Wednesday of May 2027, the newest change to the 2026 Reporting Year expands the 10 job categories into 23 job categories, making an already complex report even more complicated. But two additional changes imposed by the expanded law will go into effect sooner on January 1, 2026. First, courts will be required to impose a financial penalty upon request by the Civil Rights Department for employers not filing timely compliant pay data reporting, thereby removing the court’s prior discretion to levy an optional penalty for transgressions. Second, demographic information (i.e., race/ethnicity and gender) must be collected and stored separately from employees’ personnel records. Practically-speaking, this means that employers that collect demographic information as part of general onboarding paperwork may need to reconsider how they collect and store this information. The full text of the expanded law (SB 464) is available here.