The California Legislature requires employers of 100 or more employees to report to CRD pay and hours-worked data by establishment, pay band, job category, sex, race, and ethnicity. In 2022, the Legislature passed Senate Bill 1162 to update the 2020 California pay data reporting law by, among other things, requiring private employers with 100 or more workers hired through labor contractors in the prior calendar year to report pay data for these workers.
Remote Work Data Now Required
In addition to reporting pay and hours worked data for payroll and labor contractor employees by establishment, submissions must now include information concerning the number of employees per employee group who worked remotely. The templates ask for the following data:
- The number of employees that don’t work remotely;
- The number of remote employees located within California; and
- The number of remote employees located outside of California.
A “remote worker” is defined for pay data reporting as “a payroll or labor contractor employee who is entirely remote, teleworking, or home-based, and has no expectation to regularly report in person to a physical establishment to perform work duties.”
The FAQs also clarify that “employees in hybrid roles or (partial) teleworking arrangements expected to appear in person to perform work at a particular establishment for any portion of time during the Snapshot Period would not be considered remote workers for pay data reporting purposes.”
The CRD stated that an employer with a single establishment in California would include on its Payroll Employee Report all employees (including any employees outside of California) whether or not they telework, because all of its employees report to a California establishment in this scenario. So, as an example, if an employer has a single establishment in Riverside with 500 employees working from that location, the employer would submit a report covering all 500 employees. Likewise, if 25 of these employees were working remotely (either in California or elsewhere), the report would still cover all 500 employees.
Change to Race Reporting Categories
Employers should also note that reporting “unknown” race, ethnicity or sex of labor contractor employees is no longer allowed. The CRD’s preferred method for collection of race, ethnicity, and sex data for both reports is voluntary self-identification. Even when a worker declines to give this information, employers must still report on sex, race, and ethnicity.
What are the New Resources for Employers?
With that in mind, the California Civil Rights Department recently released updated FAQs, Pay Data Reporting templates for payroll employees and labor contractor employees, and a Pay Data Reporting Portal User Guide.
These resources are designed to assist with Pay Data Reporting submissions that are due May 8, 2024.
How Do Employers Submit Their Pay Data Reports to CRD?
Covered California employers are required to use the portal to submit their pay data reports to CRD. The CRD won’t accept reports that are submitted by any other method. For employers who are required to submit both a Payroll Employee Report and Labor Contractor Employee Report, each report must be submitted separately. The basic steps to submit the report are as follows:
- Register and create a log-in to the portal;
- Input employer information;
- State if the employer is submitting a payroll or labor contractor report;
- Provide establishment and employee information with the templates for reporting year 2023;
- Upload the Excel file;
- Upload the CSV file;
- Complete on-line forms; and
- Complete the certification process.
Employers should bear in mind that the CRD has the authority to seek an order requiring a covered employer to submit a pay data report if it fails to do so. Moreover, the Department may recoup the costs associated with any enforcement action. The CRD may also seek civil penalties of $100 per employee, with the penalties increasing to $200 per employee for a subsequent failure to file a required report.
These penalties can also be assessed against a labor contractor that doesn’t provide the required pay data to a client employer in a reasonable amount of time.
Bottom Line
The CRD made a number of significant changes to this year's reporting requirements. As a result, it’s critical that California employers understand the changes prior to starting their data collection and submitting pay data reports.
Covered employers should be certain they have the new race, ethnicity, and sex data, along with their remote worker designations, to comply with the changes to this year’s payroll employee and labor contractor employee reporting obligations.