Senate Bill 973: California Employees Need To Submit Their First Annual Pay Data Reports by March 31, 2021

To reduce California’s pay gap, Governor Gavin Newsom signed Senate Bill 973 on September 30, 2020 that gives the California Department of Fair Employment and Housing (DFEH) the authority to obtain annual pay data reports from employers. As discussed in this blog, covered employers need to submit their first reports by March 31, 2021, and annually thereafter on March 31st.

Some Basics of Senate Bill 973

SB 973 applies to private employers with 100 or more employees and any private employer required by federal law to file Employer Information (EEO-1) Reports annually.

The information required for the pay data report falls into two major categories. First, employers must report the total number of their employees labeled by sex, race, and ethnicity in the following job categories:

• Operatives
• Technicians
• Professionals
• Sales workers
• Administrative support workers
• Executive or senior-level officials and managers
• Craftworkers
• Service workers
• Laborers and helpers
• First or mid-level officials and managers

Second, employers must report the number of their employees following the same categories of sex, race, and ethnicity whose yearly incomes fall within the different pay bands used by the United States BLS (Bureau of Labor Statistics) in the Occupational Employment Statistics survey. The term ‘pay band’ is used by the BLS to describe the salary ranges established by companies/organizations for specific roles. Each pay band has a minimum and maximum salary. Within the band, an individual employee’s pay can be adjusted based on performance. In addition, employers need to indicate the number of hours worked by every employee in a pay band in the pay data report.

For employers with more than one establishment, the law requires pay data for each establishment. Senate Bill 973 defines the term establishment as “an economic unit producing goods or services.” The term originates with the BLS. In its explanation of federal employment and wage data, the BLS explains that an “establishment” is broadly defined as a physical location that is predominantly engaged in one type of economic activity. A California employer with multiple physical locations should be prepared to produce pay data for each individual establishment.

Employers must also submit a consolidated report that shows all the employees from all company establishments and references the NAICS (North American Industry Classification System) code. The NAICS was developed to help federal statistical agencies collect and analyze economic data. The system classifies each of an employer’s “establishments” to a specific industry based on the primary type of business activity occurring at the location. As an example, there is a specific code for employer establishments engaged in transportation and warehousing.

According to the new bill, California employers can create a “snapshot” to establish the numbers they need to report. The “snapshot” should calculate all the people in every job category by sex, race, and ethnicity and can reference  any pay period between October 1 and December 31 of a “reporting year.”

Third, every employer must also provide the report in a format that allows the DFEH to find and sort the data using readily available software.

Finally, for an employer who already submitted an EEO-1 report, the submission of an EEO-1 report will be considered compliant with SB 973, as long as that report contains the same or substantially similar information stated under the California Bill.

What if an Employer Fails To Comply?

If an employer fails to submit the required report to the DFEH, the Department can seek an order requiring the employer in question to comply with the law and is entitled to recover any expenses incurred during the process of seeking the order.

Reach Us for More Information

There are many more requirements under SB 973 that employers need to meet. To receive more information on the requirements you need to meet under SB 973, or to receive answers to questions you have about SB 973, contact a Palm Desert employment lawyer for employers at Sloat Law Group today at 760-779-1313.

Resource:

leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB973