California employers get potential breather

CRD offers possible extension for new reporting rules

California employers get potential breather

The California Civil Rights Department (CRD) has proposed a potential extension of two months for employers to comply with the state's new pay data reporting requirements. The deadline for reporting obligations for workers hired through labor contractors is currently set for May 10, 2023.

Employers can request an "enforcement deferral" by submitting an online request through the CRD's pay data reporting portal starting on April 18, 2023. If approved, the deadline for compliance would be moved to July 10, 2023.

The new reporting requirements under California's pay transparency law have caused confusion among employers and labor contractors alike. Private employers with 100 or more employees and/or workers supplied by contractors must file separate reports on pay, demographic, and other workforce data for both their employees and workers hired through contractors. Labor contractors are responsible for providing all necessary data to their client employers.

While the deadline for submitting pay data reports to the CRD remains May 10, 2023, the CRD may seek a court order for compliance after that date. However, in response to the new requirement for labor contractor reports, the CRD will consider deferring the requirement for compliance with respect to a Labor Contractor Employee Report filed after the due date. This deferral would be up to and including Monday, July 10, 2023. Note that enforcement deferrals are not available for pay data reports covering employees on an employer's payroll or Payroll Employee Reports.

Uncertainty about new requirements

The CRD's announcement could offer some relief to private employers in California, as complying with the new pay data reporting requirements has caused uncertainty and confusion for both employers and labor contractors. This extension could give them more time to sort through these issues and ensure compliance with the new reporting obligations.

The state's new pay data reporting requirements took effect on January 1st, 2023. Governor Newsom's signing of the Pay Transparency Act ("SB 1162") on September 27, 2022, brought significant changes to California Government Code section 12999 and California Labor Code section 432.3, affecting two critical areas for employers.

The new law impacts private employers with 100 or more employees in California, requiring them to submit a pay data report to the California Civil Rights Department (CRD) each year, regardless of whether they have filed a federal EEO-1 report. Employers can no longer submit EEO-1 reports to meet California's pay data reporting requirement.

SB 1162 changes the format and content of reporting significantly. The old law required employers to report the number of employees by race, ethnicity, and sex in specified job categories. The new law expands this requirement, necessitating employers to report the median and mean hourly rate for each combination of race, ethnicity, and sex within each job category. This is a significant change that requires employers to make direct comparisons of pay rates between different race, ethnic, and gender groups.

Previously, employers with multiple locations were allowed to consolidate the pay data information for the different locations into one report. However, SB 1162 eliminates this option, requiring employers to prepare and submit separate reports for each individual location.

Annual filing deadline changes

Another essential change brought about by the new law is the annual filing deadline. While the old law required employers to file their pay data report by March 31st each year, the new law has changed the deadline to the second Wednesday in May. In 2023, the deadline for submitting the report is May 10th.

These changes mean that employers must be aware of their reporting obligations under the new law and ensure they meet the requirements. The expanded reporting requirements and the need to report pay data by location will likely make the reporting process more complex for many employers. Employers should also be aware that the deadline for submitting their pay data report has changed and ensure that they are meeting the requirements.

The expanded reporting requirements and the need to report pay data by location will likely make the reporting process more complex for many employers. Employers should also be aware that the deadline for submitting their pay data report has changed and ensure that they meet the new deadline.

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