DFEH Issues Guidance on California’s New Pay Data Reporting Requirements

6 minute read | December.04.2020

California’s Department of Fair Employment and Housing (“DFEH”) has issued new guidance on the pay data reporting law enacted in September (see our coverage here) that established at the state level the equivalent of the EEOC’s discontinued EEO-1 pay data collection form. The law requires that starting March 31, 2021 every California employer with 100 or more employees who files a federal EEO-1 report must annually submit a pay data report to the DFEH.

The new guidance addresses a number of key questions employers have been asking about the new law. Highlights include the following:

  • Gender: Unlike the federal EEO-1 form, California provides three options for reporting pay data by gender: female, male, and nonbinary.

  • Race and Ethnicity: Race and ethnicity must be reported consistent with federal EEO-1 reporting, so employers should follow the EEO-1 Instruction Booklet for race and ethnicity identification. Per those instructions, the preferred method of collecting race and ethnicity information from employees is through an invitation to voluntarily self-identify. If an employee does not self-identify, however, the EEO instructions state that employers may use other forms of identification, such as “observer identification” or reference to other employment records.

  • Definition of “Employee”: Individuals will be considered “employees” for the 100 employee threshold regardless of whether they are located inside or outside of California, and regardless of whether they are part-time or full-time. Temporary workers are also counted if the employer is required to include them in an EEO-1 Report and required to withhold federal social security taxes from that individual’s wages. The definition also includes employees of affiliated companies consistent with federal EEO-1 filing requirements where the employer is “owned or affiliated with another company, or there is centralized ownership, control or management (such as central control of personnel policies and labor relations) so that the group legally constitutes a single enterprise, and the entire enterprise employs a total of 100 or more employees.”

  • Employer Size Threshold: The 100 employee threshold will be met in either of two situations:

    • (i) if the employer employed 100 or more employees in the Snapshot Period chosen by the employer (a “Snapshot Period” is a single pay period between October 1 and December 31 of the Reporting Year (the calendar year being reported on)); or
    • (ii) if the employer employed 100 or more employees on a regular basis during the reporting year (“Regular basis” refers to the nature of a business that is recurring, rather than constant, so for example, if an industry typically has a three-month season during a calendar year, and employer that employed 100 or more employees during that season would be required to file a pay data report to DFEH (if the employer is also required to file an EEO-1 Report)).
  • Employees Outside California: Although employees outside of California will count towards the 100-employee threshold, an employer is only required to include in its pay data reports “employees assigned to California establishments and/or working within California.” This means that an employer is required to report on (i) its California establishments and all employees of those establishments; and (ii) any other California employee(s) (including those teleworking from California but assigned to an establishment outside of California). Inclusion of other employees and establishments is optional.

  • Types of Reports: There will be two types of pay data reports: establishment reports and consolidated reports. An “establishment” is defined as “an economic unit producing goods or services” and the term includes an employer’s headquarters. The reports that an employer must make depend on the number of establishments:

    • Single establishment: An employer that has a single establishment will submit one pay data report covering all employees.
    • Multiple establishments: An employer that has multiple establishments will submit one pay data report for each establishment that is either in California or has California employees (who telework or report in to the non-California establishment) and one consolidated report as well.

  • Contents: DFEH will issue standard forms for employers to use to submit their pay data reports. Required information in the report form will include:

    • The Reporting Year (the calendar year being reported on).

    • The dates of the Snapshot Period selected by the employer (a single pay period between October 1 and December 31 of the Reporting Year).

    • The report type (establishment report or consolidated report), and the total number of reports being submitted by the employer.

    • The employer’s name, address, headquarters’ address, EIN, NAICS code, Duns and Bradstreet number, number of employees inside and outside of California, number of establishments inside and outside of California, and whether the employer is a California state contractor. If applicable, the name and address of the employer’s parent company or parent companies. And, for multiple-establishment employers:

      1. For establishment reports: the establishment’s name, address, number of employees, and major activity
      2. For consolidated reports: the names and addresses of the establishments covered by the consolidated report.

    • A “Snapshot” that tabulates the number of employees in California or who work for a California establishment in each of ten job categories by race, ethnicity, and sex, that were employed during the Snapshot Period. Employees would be assigned to job categories pursuant to guidance in the EEO-1 Instruction Booklet. The ten job categories are as follows:

      1. Executive or senior level officials and managers
      2. First or mid-level officials and managers
      3. Professionals
      4. Technicians
      5. Sales workers
      6. Administrative support workers
      7. Craft workers
      8. Operatives
      9. Laborers and helpers
      10. Service workers

    • The number of employees in the Snapshot by race, ethnicity, and sex, whose W-2 earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey. Current pay bands are as follows:

      1. $19,239 and under
      2. $19,240 – $24,439
      3. $24,440 – $30,679
      4. $30,680 – $38,999
      5. $39,000 – $49,919
      6. $49,920 – $62,919
      7. $62,920 – $80,079
      8. $80,080 – $101,919
      9. $101,920 – $128,959
      10. $128,960 – $163,799
      11. $163,800 – $207,999
      12. $208,000 and over

    • The total number of hours worked by each employee in each pay band during the Reporting Year.
    • Any clarifying remarks.
    • A certification that the information contained in the pay data report is accurate and prepared in accordance with Government Code section 12999 and DFEH’s instructions, and the name, title, signature, and date of signature of the certifying official.
    • The name, title, address, phone number, and email address of someone who can be contacted about the report.
  • Submission Portal: DFEH is in the process of securing an independent contractor to create a pay data report submission portal and provide other IT infrastructure. More information will be forthcoming, but for now, we know that pay data information will have to be provided in “a format that allows the department to search and sort the information using readily available software” such as in a comma-separated values (CSV) file.

  • Confidentiality: Employers’ pay data will not be publicly available, except to the extent necessary for purposes of an enforcement proceeding. The data will be considered confidential information that is not subject to disclosure pursuant to the California Public Records Act.

Additionally, DFEH announced that it will be regularly updating its website with new guidance, with the next round of updates to include topics such as: pay, hours worked, multi-establishment employers, acquisitions and mergers, and spinoffs. It also invites that any questions it has not yet answered may be sent to [email protected].