25 February 2021

California Pay Data Reporting Part III – Wrap Up Issues

Part I of this series was a basic overview of the new California data reporting program, including thresholds for employer coverage and which employees must be reported.  Part II addressed how to calculate pay and aggregate hours worked for exempt and non-exempt employees.

Part III discusses some miscellaneous issues such as what the California Department of Fair Employment and Housing (DFEH) plans to do with the pay and hours worked data, and some logistics of filing through DFEH’s online portal.

What Does DFEH Plan to do with the Data?

DFEH plans to use employer pay and hours worked data in its enforcement of the state’s Equal Pay Act when investigating and resolving complaints alleging unlawful pay practices.  The agency has stated that, “the gender pay gap persists, resulting in billions of dollars in lost wages for women each year in California.” And that “[p]ay discrimination continues to exist, is often ‘hidden from sight,’ and can be the result of unconscious biases or historic inequities.”  DFEH encourages employers to self-assess pay disparities along gender, race and ethnicity lines.

Snapshot Period and Deadline

Employees to report must be based on the workforce from any single payroll of the employer’s choice between October 1 and December 31, 2020.  However, the pay data reported is from 2020 W-2 Box 5, and NOT as of the Snapshot Period.  The deadline for submission to DFEH is March 31, 2021 for the 2020 Reporting Year.  Report data must be submitted through the DFEH portal and will not be accepted by mail or email.

DFEH Reporting Portal

Covered employers must be prepared to initially provide general background information, such as the establishment name(s), parent company (if applicable), FEIN number, DUNS number, principal business activity, NAICS Code, whether an EEO-1 Report has been filed / EEO-1 ID number, certifying filer’s contact information and whether the establishment is the employer’s headquarters.  DFEH contends that all data is secure on its encrypted storage portal.

Employee Demographics

A common question is how to categorize race and sex for an employee who declines to self-identify on a disclosure form.  Voluntary employee self-identification is always the preferred method.  However, if not completed, an employer must assign a race/ethnicity and sex based on its available records (such as documents submitted for I-9 verification) or a manager’s observer judgment.  Obviously, this is an imprecise task – as to race/ethnicity and especially since the DFEH’s options for reporting sex include “non-binary” which is recognized in California under a 2017 law.

Will the Data Be Published?

DFEH plans to publish aggregated summary information, but has not yet announced what its final report will look like.  Individually identified employers and employee data will be kept confidential and not disclosed, according to the DFEH’s FAQ.

Be Sure to Save a Copy of Completed Report

Once a user has completed and certified the employer’s submission, and exited the reporting portal, the DFEH submission ID expires and the user will not be able to access the submission.  Similarly, if an employer discovers errors that need to be corrected, it will have to start all over with a new Pay Data Report submission. Therefore, be sure to print out or screen shot a copy of your report as evidence of completion and exactly what was submitted.

As additional issues arise related to the new California Pay Data Reporting program, we will be sure to keep you updated.  Please contact the authors or your Miller Johnson employment attorney with any questions.