By Jaimee K. Wellerstein, Esq. and Michael J. Bruskin, Esq.
California Employers with 100 or more employees must report their 2023 employee pay data to the state no later than May 8, 2024. Updates published this year include new required data fields. Fortunately, we’ve got all the information you need to make this as painless as possible and keep you in compliance.
Background
In 2020, California passed Senate Bill 973, codified as California Government Code 12999, requiring all private employers with 100 or more employees to report certain pay data to the California Civil Rights Department (CRD) each year. The law was subsequently amended and expanded in 2022 via Senate Bill 1162 to update the filing requirements and include civil penalties for noncompliance.
Employer Requirements
Covered Employers (those with 100 or more employees or 100 or more labor contractors during the calendar year 2023) must submit their reporting to the CRD via their online portal HERE. Pay data is due for covered employers on the 2nd Wednesday of May each year, falling on May 8, 2024 this year. Compliant report templates in MS Excel format provided by the state can be found HERE. Covered employers must complete the relevant reports and submit them through the portal by the May 8, 2024 deadline. Note that for purposes of these requirements, employers should count ALL employees and labor contractors both inside and outside the State of California in determining whether they are required to file.
New Data Reporting Requirements
SB 1162 requires that employers now calculate the mean and median hourly rate of employees among all reportable categories: establishment location, job category, race/ethnicity, and sex. The CRD has provided an updated FAQ document with specific instructions on how to make these new calculations. The FAQ can be found HERE.
Increased Noncompliance Penalties
Previously, the CRD was authorized to take civil action against an employer who failed to submit pay data reports, including recovery for all costs incurred for bringing such an action to compel compliance with the law. The CRD is also empowered to seek civil penalties of $100 per employee against an employer who fails to file a required report, with the penalties increasing to $200 per employee for each subsequent failure to file a required report.
Separate Report for Labor Contractors
Beginning in 2024, employers must file a separate report for Labor Contractors if they had 100 or more total contractors in calendar year 2023. This report cannot be combined with the Payroll Employee report and must be completed separately, but is only required if you have 100 or more Labor Contractors during the calendar year, regardless of the number of Payroll Employees. The Labor Contractor report must also include all the same demographic information and the Payroll Employee and can no longer utilize “unknown” as a response to these fields. You must seek out demographic information from all Labor Contractors if you are a Covered Employer.
The statutory guidance for the definition of a “Labor Contractor” is, unfortunately, rather unclear. The statute includes “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.”
Remote Workers
New data requirements have been added for both reports, requiring employers to report:
- The number of employees that do not work remotely;
- The number of remote employees located within the State of California; and
- The number of remote employees working outside of California but assigned to a California establishment.
For purposes of these reports, “remote workers” are limited to employees who are entirely remote and exclude hybrid employees or anyone with any sort of expectation of regular reporting to a physical establishment.
Employer Takeaway
Employers should review the CRD’s FAQ to determine if they must file either a Payroll Employee Report, a Labor Contractor Report, or both based on the total number of employees or contractors they utilized in 2023. Employers with fewer than 100 total employees are not required to submit reporting. If a Labor Contractor report is required, identify all necessary Labor Contractors and submit written requests for any additional required data you may not currently possess. Labor Contractors are required to comply with these requests and may face penalties for refusing to do so. Covered employers must complete and submit the required reports through CRD’s online portal no later than May 8, 2024.
If you have any questions about how this new law may affect your business or need assistance preparing compliant policies or revising your practices, please contact your attorneys at Bradley, Gmelich + Wellerstein LLP. We are here to help.
About the Author
Jaimee K. Wellerstein, Esq. is a Partner and the firm’s Employment Team Head. Representing employers in all aspects of employment law, Ms. Wellerstein collaborates with her clients to develop proactive business and legal strategies to try to avoid workplace conflict and employment disputes. She provides legal advice and counsel to numerous businesses, including conducting individualized training programs for both management and employees. Ms. Wellerstein performs internal audits of her client’s employment practices to ensure compliance with the rapidly-changing world of employment laws and guides investigations of employee allegations regarding harassment, discrimination, and employee misconduct.
When litigation cannot be avoided, Jaimee K. Wellerstein aggressively defends her clients against employment law claims in the state and federal courts, as well as at administrative hearings, arbitrations, and mediations. Having defended numerous representative and individual lawsuits on behalf of her clients, Ms. Wellerstein is a skilled litigator and negotiator with a broad spectrum of experience upon which to draw.
A frequent speaker on numerous topics, including employment law and contract law, Ms. Wellerstein regularly conducts training seminars and programs for managers and employees in all areas of employment practices and policies.
About the Author
Michael J. Bruskin, Esq. is Special Counsel for the firm’s Employment Team Advice & Counsel Practice Group. Advising employers in all aspects of employment law, Mr. Bruskin develops deep relationships and working knowledge of his clients’ operational preferences and devises forward-thinking strategies to align business needs with risk mitigation and legal compliance. Mr. Bruskin performs internal audits of his client’s employment practices to ensure compliance with the rapidly changing world of employment laws and guides their employment and business strategies to create successful and lasting relationships with their employees.