All private California employers with 100 or more employees are required by May 8 to submit pay data reports, regardless of federal EEO-1 reporting status.
The Golden State’s Senate Bill 1162, which went into effect Jan. 1, 2023, extended previously existing obligations, including a requirement that private employers with more than 100 employees hired through one or more labor contractors in the prior year submit a separate pay data report covering those contract employees.
The law defines “labor contractor” 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.”
According to an SIA citation on the topic, the report must include:
- The names of the staffing companies or labor contractors,
- The number of supplied workers by race, ethnicity and sex within job categories during a “snapshot” single pay period,
- The number of workers whose annual earnings fall within the pay bands used in the Occupational Employment Statistics survey, and
- Within each job category, for each combination of race, ethnicity and sex, the median and mean hourly rate.
Race/Ethnicity and Sex
For the 2023 Labor Contractor Employee Reports, reporting “unknown” race/ethnicity or sex of a labor contractor employee is no longer permitted, and employers must report employees by seven race/ethnicity categories and three gender categories (female, male and nonbinary).
“Employee self-identification is the preferred method of identifying race/ethnicity information,” states an FAQ issued by the State of California’s Civil Rights Department. “Employers may offer employees the opportunity to self-identify, explaining to employees that this inquiry is voluntary.”
However, if an employee declines to voluntarily provide their race/ethnicity, employers must still report the employee according to one of the categories, using (in the following order): current employment records, other reliable records or information, or observer perception, according to the department.
“CRD recognizes the risk of inaccurate race/ethnicity identification based on observer perception alone; this method should only be used after making a good faith effort to obtain race/ethnicity information from the employee voluntarily or from other reliable records,” states the FAQ. “When an employer uses observer perception, CRD encourages employers to utilize the clarifying remarks field to state they have done so, stating for example: ‘The race/ethnicity of [number] employees in this employee grouping is being reported based on observer perception.’”
Remote Workers
Both payroll and labor contractor employee reports must now include information regarding the number of employees per employee group who worked remotely, according to a blog post by law firm Seyfarth Shaw LLP. Specifically, the data templates ask for:
- The number of employees that do not work remotely,
- The number of remote employees located within California, and
- The number of remote employees located outside of California.
For the purposes of pay data reporting, “remote worker” refers to employees (payroll employees or labor contractor employees) who are entirely remote, teleworking or home-based and have no expectation to regularly report in person to a physical establishment to perform their work duties, according to the FAQ. Employees in hybrid roles or partial teleworking arrangements expected to regularly 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.
Employers should use the snapshot period when determining whether to classify an employee as a remote worker or not, according to the department. If an employee was expected to report in person to a physical establishment during the snapshot period, whether or not they work remotely at other times of the year, the employee should not be reported as a remote worker.
In addition to employees who work on-site at a California establishment, employees and labor contractors who are based in a California establishment but conduct work at sites out of state, do telework outside of California but are assigned to California establishments, and telework inside California and are assigned to other state establishments should all be included, states a blog post by law firm Blank Rome.
Civil penalties for failing to file a required report in a timely manner could hit $100 per employee, which increases to $200 per employee for a subsequent failure.
