Complying with the California Pay Data Reporting
This article provides information on legally required pay data reporting in California. It gives an overview of which employers need to take action, what the deliverables are, how to get started, and how to use the PayAnalytics software to help meet local requirements.
Overall, the laws outline a twofold responsibility for employers: annual pay data reporting and pay scale transparency requirements. Additionally, record keeping obligations require employers to keep records of the job title and wage history for each employee for the duration of their employment plus three years after termination. These records must be made available to the Labor Commissioner, who may inspect them for historic patterns of wage discrepancy.
In this article we will break down the California Gender Pay Gap Reporting and help you to answer four questions:
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Please keep in mind that the articles in the PayAnalytics Help Center do not offer legal advice.
Who does it apply to?
The first report type, the payroll employee report is required by all private employers with 100 or more employees.
The second report type, labor contractor employee report, is required by private employers with 100 or more employees hired through labor contractors within the previous calendar year to submit a separate pay data report covering those workers.
Employers with 15 or more employees must include the pay scale for the position in any job posting, according to the Pay scale transparency.
What is the requirement?
The law outlines a twofold responsibility for employers: annual pay data reporting and pay scale transparency requirements.
Firstly, for the pay data reporting requirements, the employers must report their data to the state’s Civil Rights Department (CRD) by the second Wednesday of May every year. The employer chooses the snapshot period for the data, and the period can be any single pay period in the year’s final quarter. There are two types of pay data reports: payroll employee report and labor contractor employee report.
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The payroll employee report is required by all employers with 100 or more employees. Organizations with multiple establishments should submit a single consolidated payroll employee report covering all establishments. The report follows a template, which groups workers based on job category (based on EEOC definitions), gender, race/ethnicity, pay band (defined according to the Bureau of Labor Statistics Occupational Employment and Wage Statistics survey), and establishment (for employers with multiple establishments).
For each group of payroll employees, employers should report the following, and for each row, employers can feel free to add clarifying remarks:
mean hourly rate,
median hourly rate,
total hours worked,
the number of workers, broken down by remote worker status.
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The labor contractor employee report or the labor contractor report, is required for all employers with 100 or more workers hired through labor contractors. It uses a template very similar to the payroll employee report, reporting the same key metrics and extending the template by adding information about the contracting company. It is also based on a snapshot period, but it does not need to be based on the same period as the payroll employee report.
Employers must also disclose in the pay data report the ownership names of all labor contractors used to supply employees. A labor contractor is defined as “an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.”
There are substantial penalties for failing to meet the reporting requirements. A first violation can incur fines of up to $100 per employee, and a subsequent violation can cost up to $200 per employee.
The second part of California’s legislation addresses pay scale transparency. The requirements aim to make pay information accessible to both current employees and job applicants. If asked by an employee or applicant, all employers must disclose the pay range, in the form of specific pay bands, of any jobs. Additionally, employers are required to keep pay-related records for each employee for at least three years after the employee’s departure.
Employers with 15 or more employees are also subject to rules related to job listings - they must include the pay range for each posted job.
How does PayAnalytics help you to meet the requirements?
Before generating the report, ensure that your dataset is properly prepared and uploaded.
Preparing your dataset
Note that a dataset containing at least the following data needs to be imported prior to generating the report:
Unique employee ID (mandatory for all datasets),
Gender,
Race/ethnicity,
Hourly rate,
Total hours worked,
Job category,
Compensation amount from IRS W-2 form (this determines the employee’s pay band),
Remote worker status,
Establishment (for organizations with multiple establishments),
Contractor (for the labor contractor report).
Note that if you need some help defining job categories, you can use the built-in 10 EEOC job categories to map your employee’s job before you create the report.
Generating the report:
Once you have completed uploading your dataset, head to Reports in the navigation bar located on the left side of the page, click Create new report, navigate to the Government mandated report, and select the Pay data reporting (California). The system will guide you to the report configuration page, starting with the Compensation and hours configuration, where you can choose which fields in your dataset reflect compensation and hours worked, as illustrated in the following picture:
Compensation and hours configuration
Furthermore, you can choose the field for job categories, and map your values to the EEOC job categories if they differ from your data, as presented in the following illustration:
Mapping of job roles
You can also map your values for Race/Ethnicity to the ones defined by the EEOC, as presented in the following picture:
Mapping of race/ethnicity
Note that the report only allows binary gender definitions.
At last you can map your values to whether employees are remote workers or not, as illustrated in the following picture:
Mapping the status of employee's remote work
When generating the report for the first time, you will also have to fill out the relevant employer and establishment information. For subsequent reports, the system will remember your information.
Finally, you have the option to Report labor contraction information and enter the required values when submitting the report to the CRD. Please note, this can also be done in Excel after the report has been generated.
Once completed, click Generate report and find your report in the Excel spreadsheet.
Which steps should we take next?
Beyond California state requirements, the system also enables you to generate reports that help meet other federal reporting obligations in the U.S. These include key compliance report for federal regulation, streamlining the reporting process and ensuring your organization stays aligned with national standards.
EEO-1 demographic data – to learn more about the EEO-1 reporting requirements, see Complying with the EEO-1 reporting
OFCCP reporting for federal contractors - our system may help you with some of the requirements.
Beyond generating reports in PayAnalytics, here are some actions you might want to consider depending on the results:
Conduct a comprehensive pay equity analysis to assess gender and other demographic pay gaps, setting clear targets for pay equity, to learn more about creating a compensation model, see Creating a compensation model
Utilize compensation tools to support ongoing salary decisions for new hires, ensuring pay equity is maintained with every raise and promotion, to learn more about the compensation assistant, seeUsing the Compensation assistant
Additionally, understanding workforce diversity is crucial in identifying the root causes of any unadjusted pay gaps. Consider exploring our workforce analytics report to gain valuable insights into your organization's evolving workforce and make data-driven decisions to foster a more equitable work environment .To learn more about workforce analytics, see Workforce analytics
Conclusion and next steps
If you would like further support around the State of California Pay data report, please don't hesitate to reach out for assistance through the Help Center support channel or reach out to our pay equity consultants at clientservicespe@beqom.com.