California Requires Compensation Data Collection

At a Glance

• Employers with 100 or more employees are required to file an annual Employer Information Report on or before March 31, 2021 and annually thereafter to the Department of Fair Employment and Housing.
• The pay data report must include the number of employees by race, ethnicity, and sex in 10 job categories.
• Based on W-2 information, employers must include employee compensation in one of 11 pay bands used by the United States Bureau of Labor Statistics in its Occupational Employee Survey, by race, ethnicity, and sex.
• The Bill is available here.

Introduction

California Governor Gavin Newsom enacted SB-973 that requires California employers with 100 or more employees to annually report their employees compensation data. The requirement goes into effect January 1, 2021 and the first report is due by March 31, 2021, and must be submitted annually thereafter by March 31.

The report is modeled after the EEO-1 Component 2 Pay Data Report, which the EEOC is not requiring for future years.

Report Data

The report must include employee, including part time employees, data including race, ethnicity, and sex by Job Category. The data should be captured during the snapshot period between October 1 and December 31 of the reporting year.

The report also requires employers to provide pay data information in pay bands defined by the Bureau of Labor and Statistics, by race, ethnicity, and sex. The data should reflect what is reported on the employee’s W-2 for the reporting year, regardless of whether the employee worked for the full calendar year.

• The report also will include the total number of hours worked by each employee in each pay band during the reporting year.
• If the employer has multiple establishments, the employer must submit a report for each establishment and a consolidated report that includes all employees. The report must include the employers NAICS code.
• The report will have a section for employers to provide clarifying remarks, but remarks are not required.

If an employer submits to the department a copy of the employer’s Employer Information Report, otherwise known as an EEO-1 Report, containing the same or substantially similar pay data information required under this section, then the employer is in compliance with this section.

Next Steps

Paylocity will provide additional information about filing the report as it becomes available.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner.

This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.