Deadline Shift: New Requirements, and Implications
The California Pay Data Reporting Deadline is fast approaching, with new requirements and significant changes for employers to be aware of this year. The deadline for filing pay data reports is now May 10th, thanks to SB 1162 which shifted the due date from the end of March to the second Wednesday of May each year. Employers must be prepared for these changes and understand the implications on their reporting processes.
SB 1162 mandates that employers determine and disclose the mean and median hourly rate of their employees based on job category, race/ethnicity, and gender for each establishment. This newly imposed obligation could pose a significant challenge for employers since they must first compute each employee’s specific hourly rate before establishing the average and median hourly rate for each group.
California Reporting Division: Updates and Resources
The California Reporting Division (CRD), formerly the Department of Fair Employment and Housing, has updated its FAQs to reflect these changes and plans to provide updated report templates and other documents, with the portal to receive pay data reports opening on February 1.
Noncompliance with pay data reporting requirements now carries increased penalties, with civil penalties of $100 per employee for failure to submit pay data reports and $200 per employee for subsequent violations. The CRD has updated its FAQs to reflect these new civil penalties.
Labor Contractor Employee Reports: Additional Requirements
Another significant change made by SB 1162 is the requirement for employers with 100 or more employees hired through “labor contractors” to submit separate pay data reports covering such employees hired in the prior calendar year. These reports are in addition to the pay data report employers submit for their own workforces. The CRD refers to the reports filed on employees from labor contractors as “labor contractor employee reports,” while reports filed on an employer’s own employees are called “payroll employee reports.”
The updated FAQs provide clarification on the labor contractor employee report requirements, including counting labor contract employees located inside and outside of California, counting part-time labor contractor employees and those on paid or unpaid leave, and submitting one labor contractor report even if an employer has multiple labor contractors.
Employers are expected to group labor contract employees who have the same job category, pay band, race/ethnicity, and sex, and calculate the labor contract employee group’s mean and median hourly rate. The Snapshot Period for the labor contractor employee reports will be a single pay period between October 1 and December 31 of the reporting year.
Seek Legal Counsel and HR Expertise for Compliance
Employers are encouraged to seek legal counsel or consult with HR professionals well-versed in California employment laws to navigate the complexities of the new reporting requirements. These experts can provide valuable guidance on interpreting the regulations, implementing compliant reporting processes, and addressing any specific concerns related to an organization’s unique circumstances. Employers should maintain accurate records and ensure ongoing compliance throughout the year to avoid penalties for subsequent violations. Regularly reviewing and updating reporting processes will help organizations stay in line with the evolving regulations and mitigate any potential risks.
Despite the updated FAQs providing some guidance on the labor contractor employee reporting requirements, many questions remain unanswered. For instance, the definition of a “labor contractor” is still unclear, as the updated FAQs only repeat the statutory definition without providing further interpretation.
Conclusion: Navigating Challenges and Ensuring Compliance
In conclusion, the upcoming California Pay Data Reporting Deadline brings new challenges and requirements for employers, including the obligation to disclose mean and median hourly rates based on specific criteria and increased penalties for noncompliance. Employers must be prepared to navigate the complexities of these changes, including reporting for labor contractor employees, and stay informed about the CRD’s updated FAQs and resources. Ultimately, proactive preparation and understanding of the new requirements will be crucial for employers to ensure compliance and avoid costly penalties.