California: The March 31, 2021 Pay Data Reporting Deadline Is Approaching. What You Need To Know
By Swerdlow Florence Sanchez Swerdlow & Wimmer
March 10, 2021
Pursuant to a new state law, California Government Code Section 12999, which became effective on January 1, 2021, private employers with 100 or more employees (with at least one employee in California) are required to submit a “pay data report” to the Department of Fair Employment and Housing (“DFEH”) by March 31, 2021, and annually thereafter. The Pay Reporting Portal is now active, and employers can begin submitting pay data reports to the DFEH for the 2020 calendar year.
In anticipation of the upcoming deadline, the DFEH recently posted a User Guide, containing a detailed overview of the pay data report, the portal to upload reports, and instructions for creating and certifying the reports. In addition, the DFEH published an Excel template and a .CSV example on its website with instructions and examples for completing the pay data report. The DFEH also published and continues to update frequently asked questions (FAQs) regarding the requirements.
Employers required to submit a pay data report include employers with at least one employee in California that have at least 100 employees nationwide and who are required to file an annual Employer Information Report (EEO-1) pursuant to federal law. Part-time employees and employees on leaves of absence are counted toward the 100-employee threshold.
Information Included In Pay Data Report
California’s pay data report must identify employees in two ways. First, employers must identify the number of employees by race, ethnicity, and sex (including non-binary identification) within the following ten job categories for the previous calendar year: executive or senior level officials and managers; first or mid-level officials and managers; professionals; technicians; sales workers; administrative support workers; craft workers; operatives; laborers and helpers; and service workers.
Second, the pay data report must identify the number of employees based on race, ethnicity, and sex whose annual earnings fall within each of the eleven pay bands established by the Federal Bureau of Labor Statistics and include the total number of hours worked by employees in each pay band, including paid time off. When calculating the total hours worked of a non-exempt employee, employers should use time records to calculate the actual hours worked plus the hours the employee was on paid time off for which the employee was paid by the employer. For exempt employees, the calculation of total hours worked is determined by multiplying the total number of days worked plus the total number of days the employee was on leave where the employee was paid by the employer, by the average number of hours worked per day by the employee. Employers may use a proxy for calculating hours worked by exempt employees where some exempt employees track hours and others do not. Utilizing a proxy still requires an employer to calculate each exempt employee’s hours worked individually. When there is no proxy information available, employers should make a reasonable estimation based on available information. This reasonable estimation may be 8 hours per day for a full-time exempt employee and 4 hours per day for a part-time employee. The pay bands are as follows: $19,239 and under; $19,240 – $24,439; $24,440 – $30,679; $30,680 – $38,999; $39,000 – $49,919; $49,920 – $62,919; $62,920 – $80,079; $80,080 – $101,919; $101,920 – $128,959; $128,960 – $163,799; $163,800 – $207,999; and $208,000 and over.
Employers must select a so-called “Snapshot Period,” or a single pay period between October 1 and December 31 of the “Reporting Year” (the prior calendar year), for purposes of completing the pay data report. This “Snapshot Period” is only used to identify the employees who must be reported on in the employer’s pay data report. This Snapshot Period should be the same for all employees, even for employers who have different pay periods for different job classifications. In these situations, when determining the employees to be reported on, employers should include all individuals who were employed during the period regardless of whether an employee was paid during the Snapshot Period. For example, if an employer had 100 employees during the month of November of the Reporting Year, 50 of whom are paid bi-weekly and 50 of whom are paid semi-monthly (on the 15th and last day of the month) and the employer selects a Snapshot Period from November 16th through November 29th, the employer must include all 100 employees in the pay data report, even if 50 of those employees did not receive a paycheck within that time period.
The pay data report also provides a section for employers to submit clarifying remarks or add context regarding the disclosed pay data information.
All California employees must be included in the pay data report. This includes those assigned to California workplaces and teleworkers working in California. Employers may, but are not required to, include employees outside of California in their pay data reports.
Failure to Timely File a Report
The DFEH has the power to seek an order compelling an employer to comply with the pay data reporting requirements and to recover the costs associated with seeking such compliance. Therefore, employers should ensure they timely file their pay data reports by March 31, 2021.
Due to the COVID-19 pandemic, employers may request that the DFEH defer seeking an order for compliance for one month. Deferral requests must be submitted by March 31, 2021, and employers granted deferrals must file pay data reports by April 30, 2021.
The FAQs continue to be updated and address many issues including earnings calculations, multi-establishment employers, teleworking employees, and identification of an employee’s sex.
When reporting employee earnings, employers must identify the total actual earnings during the Reporting Year, as shown on the Internal Revenue Service Form W-2 Box 5, for each employee in the Snapshot Period, regardless of whether the employee worked for the full calendar year. Employers should not annualize earnings for employees who did not work the entire Reporting Year. For example, if an employee started work on July 1, 2020, with an annual salary of $100,000 and her 2020 W-2 Box 5 income is $50,000, the employee should be counted in the pay band encompassing $50,000, not $100,000. In addition, employers must include paid time off in the calculation of hours worked.
The pay data report recognizes three different genders: female, male and non-binary. Employee self-identification should drive the reporting, but self-identification is voluntary. If an employee declines to self-identify sex, employers must still report the employee according to one of the three categories. To do so, employers should use employment records or other reliable information, such as an employee’s own pronoun use, in determining which sex to identify in the report.
Multi-establishment employers must include all of its reportable data in a single report. In addition, employers with multiple establishments must include their employees assigned to California establishments and/or working within California. If employees are assigned to an establishment outside of California but telework from California, the employer’s pay data report must include that establishment. For an establishment outside of California, the employer has two options: 1) report all employees assigned to that establishment outside of California; or 2) report only those employees teleworking from California who are assigned to the establishment.
Employers should familiarize themselves with the User Guide and begin collecting their reportable data in order to meet the March 31, 2021, deadline. Employers requiring additional time should request a deferral as soon as possible.
If you have any questions regarding the submission of your company’s pay data report, or need help compiling and filing this data, contact your Swerdlow Florence Sanchez Swerdlow & Wimmer attorney.
Oregon: OR-OSHA Issues New Permanent Rules for All Workplaces During COVID-19 https://t.co/AccVG34xUm
Ontario has Introduced Three Days of Employer-Paid (WSIB-Reimbursed) COVID Sick Leave https://t.co/HXza1pNZBG
The CDC’s Revised Rules for the Fully Vaccinated: What This Means for Employers https://t.co/3G4aaAWOdj