California Pay Data Reporting: Part I – The Basics
You’ve probably read about the new pay data reporting required by California Senate Bill 973 (9/30/2020). This state-driven program is modeled after the now defunct federal EEO-1 Component 2 in which EEOC required submission of 2017 and 2018 pay and hours worked data. While substantially similar in format, there are some significant differences in what has to be reported to the California Department of Fair Employment and Housing (DFEH). This Part I describes an overview of the reporting obligations.
What Companies Must File a Pay/Hours Worked Report?
Any private sector employer with at least 100 employees, who is required to file an annual EEO-1 Report, and has at least one employee that works, lives or reports to a location in California is required to submit pay and hours worked data to DFEH. This includes remote workers. As an example, a 120 employee Michigan business that has a sales employee residing in California (regardless of the sales or customer territory), or an IT employee sheltering in place in California during the COVID pandemic. The 100 employee coverage measurement is at the time of the “Snapshot Period,” or the number employed on a regular basis during the “Reporting Year.”
Who Is Not Required to File a Report?
Any business with less than 100 U.S. employees, regardless of the number working or living in California. Any entity who has to file an EEO-3, EEO-4, EEO-5 or IPEDS report.
When Is The Report Due?
The deadline for submitting data into the DFEH reporting portal is March 31, 2021, and each March 31 annually thereafter.
What Is a “Snapshot Period” and “Reporting Year”?
A Reporting Year is a calendar year containing the Snapshot Period, which initially is 2020. A Snapshot Period is any pay period between October 1 and December 31, 2020. A covered employer must report any employee (full time and part time) on the payroll as of the Snapshot Period, even if not still employed at year-end or when the report is filed.
What Employees Must Be Reported?
A covered employer must report on all of its employees assigned to, working or living in California:
- Employees who physically work at a California establishment (“an economic unit producing goods or services”) such as an office, factory, warehouse, distribution center
- Employees in other states who report to a California establishment
- Employees who reside in California but report to an establishment in another state
A covered employer has the option to include all employees outside of California and regardless of location if it is more convenient to report all individuals in the company’s HRIS/database.
What Data Is Reported?
Similar to EEO-1 Component 2, data must include total compensation and hours worked during the entire Reporting Year, even if the employee did not work the entire year. Pay to be reported is from IRS Form W-2 Box 5 – Medicare wages and tips. Hours worked data is all hours worked by an employee during the Reporting Year, which includes actual hours worked plus the hours he/she was on paid time off (vacation, sick days, PTO, holidays, paid leave, etc.). Unlike the former EEO-1 Component 2, there is no need to back out any paid time off. Exempt employees’ hours worked data can be reported with actual hours tracked, or a proxy if the company does not keep time worked records for exempt employees.
In our next Part II installment, we will cover more details about what goes into the California pay and hours worked calculations, and reporting format. Stay Tuned!