On September 30, 2020, California Governor Gavin Newsom signed into law SB 973, which imposes new pay reporting requirements on certain employers. Employers in California with more than 100 full-time and part-time employees that are required to file employer information reports with the federal government (“EEO-1” reports) will be required to submit pay and hours-worked data to California’s Department of Fair Employment and Housing (“DFEH”) by March 31, 2021, (and each March 31 thereafter). The data must be reported by sex, race and ethnicity of employees in the 10 job categories used in the federal EEO-1 form.
The California Department of Fair Employment and Housing (DFEH) has issued new guidance on aspects of the new law with additional guidance expected to be published soon.
Specifically, SB 973 requires employers to report: (1) the number of employees by race, ethnicity, and sex in each of these job categories (looking at any single pay period between October 1 and December 31 of the preceding year); (2) the number of employees by race, ethnicity, and sex whose annual earnings fall within each of the pay bands used by the Bureau of Labor Statistics; (3) the total number of hours worked by each employee counted in each pay; and (4) the employer’s North American Industry Classification System (“NAICS”) code. If an employer has more than one establishment in California, it is required to submit a report for each establishment, as well as a consolidated report that includes all employees.
The law is intended to identify and remedy pay inequities and strengthen current equal pay laws. Under the new law, DFEH may use the data collected to prosecute discriminatory wage practices claims under the Equal Pay Act (California Labor Code § 1197.5). Moreover, the Division of Labor Standards Enforcement (“DLSE”) will have access to the reports, empowering the Labor Commissioner to proactively litigate against companies suspected of discriminatory pay practices, as opposed to merely reacting to complaints from employees, or investigating targeted industries.
While the new law requires that reported data be kept confidential and not subject to disclosure under the Public Records Act, the DFEH may develop, publish on an annual basis, and publicize aggregate reports based on the data obtained pursuant to its authority under the law, provided that the aggregate reports are reasonably calculated to prevent the association of any data with any individual business or person. However, employees in active equal pay litigation will likely seek discovery of reported data as well.