In a continued attempt to conquer racial and gender pay gaps, California Governor Gavin Newsom, on September 30, 2020, signed into law SB 973. The law imposes new pay reporting obligations to certain organizations. The SB 973 law takes effect on January 1, 2021. It requires organizations to file a yearly pay data report by 31st March of every year. The California legislature states that the collection of payment data will authorize the state to “more adeptly recognize pay patterns and provide for targeted implementation of equal wage or discrimination laws.” 

The new SB 973 law is in response to the order of the Trump Administration in August 2017, excluding an Obama-era pay gap initiative that required organizations to present a federal EEO-1 (Employer Information Report). The report involves pay data by race, gender, and ethnicity.

New SB 973 Pay Data Reporting Requirements for California Organizations 

Under the new SB 973 law, California organizations with hundred or more workers, who were obliged to file a yearly EEO-1 (Employer Information Report) report under national law, are now obligated to present a pay data report to the DFEH (California Department of Fair Employment and Housing). It mirrors the reporting necessities of the EEO-1 form. The report must incorporate: 

• the number of workers by ethnicity, race, and sex in every ten broad job classifications, and 
• the number of workers by ethnicity, race, and sex whose yearly earnings (as defined W-2 income) come within each of the payment bands established by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey. 

Also, the report must incorporate the total working hours of each worker within a given payment band. For reporting purposes, organizations will create and present a “snapshot” payment period in which it includes all people who were on the organization’s payroll in any single pay period of the choice of organizations between October 1 and December 31.

Organizations with multiple establishments need to present a report for each establishment and a combined report that covers all workers. Also, the organizations must provide the data in a form that allows the California Department of Fair Employment and Housing to search and classify the data employing readily available software. Organizations may or may not present clarifying remarks about data presented in the report. Also, the law obliges the Department of Fair Employment and Housing to make the reports accessible to the Department of Labor Standards Enforcement and maintain the reports for a minimum of ten years. Along with that, the law empowers the Department of Labor Standards Enforcement to seek an order for the non-reporting organizations to comply.

Conclusion

In light of the upcoming reporting necessities, California organizations should start the process of assessing whether they are in a position to form the needed data by March 31, 2021, or not.

To know more about the new pay data reporting law, attend the webinar conducted by Compliance Prime.