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DFEH Issues Frequently Asked Questions Regarding California’s New Pay Data Reporting Law Under the Equal Pay Act

Posted in Labor Law, New Legislation and Regulations, Wage & Hour

On September 30, 2020 Governor Newsom signed Senate Bill 973 which requires large employers to report certain pay and other data to the Department of Fair Employment and Housing (DFEH) by March 31, 2021 and annually thereafter. On November 2, 2020, the DFEH issued certain FAQs regarding this new obligation and announced that it anticipates rolling out a secure online reporting system in advance of the 2021 filing deadline.

Below are a few of the DFEH’s FAQs.

Why does California require large employers to report pay data to DFEH?

(11/02/2020) In SB 973, the California Legislature required employers of 100 or more employees to report to DFEH pay and hours-worked data by job category and by sex, race, and ethnicity (hereinafter “pay data”). In enacting this legislation, the Legislature found that “[d]espite significant progress made in California in recent years to strengthen California’s equal pay laws, the gender pay gap persists, resulting in billions of dollars in lost wages for women each year in California. Pay discrimination is not just a women’s issue, but also harms families and the state’s economy. In California, in 2016, women working full time, year round made a median 88 cents to every dollar earned by men, and for women of color, that gap is far worse. Although there are legitimate and lawful reasons for paying some employees more than others, pay discrimination continues to exist, is often ‘hidden from sight,’ and can be the result of unconscious biases or historic inequities.”

By creating a system by which large employers report pay data annually to DFEH, the Legislature sought to encourage these employers to assess themselves pay disparities along gendered, racial, and ethnic lines in their workforce and promote voluntary compliance with equal pay and anti-discrimination laws. In addition, SB 973 authorized DFEH to enforce the Equal Pay Act (Labor Code section 1197.5), which prohibits unjustified pay disparities. The Fair Employment and Housing Act (Gov. Code § 12940 et seq.), already enforced by DFEH, prohibits pay discrimination. Employers’ pay data reports will allow DFEH to more efficiently identify wage patterns and allow for effective enforcement of equal pay or anti-discrimination laws, when appropriate. DFEH’s strategic vision is a California free of discrimination.

Will DFEH’s pay data reporting system be similar to the one used by the EEOC to collect EEO-1 Component 2 data?

(11/02/2020) To ease reporting by employers, DFEH is endeavoring to create a system that closely resembles the EEOC’s system to the extent permitted by state statute.

 What is the deadline for employers to submit their pay data report(s) to DFEH?

(11/02/2020) Under Government Code section 12999(a), employers must submit their pay data reports to DFEH on or before March 31, 2021, and then on or before March 31 each year thereafter.

 What are the penalties for employers who fail to file?

(11/02/2020) “If [DFEH] does not receive the required report from an employer, the department may seek an order requiring the employer to comply with these requirements and shall be entitled to recover the costs associated with seeking the order for compliance.” Gov. Code § 12999(h).

Will an employer’s pay data be publicly available?

(11/02/2020) Government Code 12999(i) prohibits DFEH, the Division of Labor Standards Enforcement (DLSE), and their staff from making “public in any manner whatever any individually identifiable information obtained pursuant to their authority under this section prior to the institution of an investigation or enforcement proceeding by [DFEH and/or DLSE] under Section 1197.5 of the Labor Code or Section 12940 involving that information, and only to the extent necessary for purposes of the enforcement proceeding. For the purposes of this section, ‘individually identifiable information’ means data submitted pursuant to this section that is associated with a specific person or business.”

The DFEH advises that further guidance is coming soon in updated FAQs on the following topics:

  • What information/content is required in an employer’s report.
  • Further information on the definition of “pay.”
  • Further information on the definition of “hours worked.”
  • Information regarding multi-establishment employers.
  • Information on reporting obligations in connection with acquisitions and mergers.

The DFEH advises that it will be regularly updating the FAQs and it invites employers to write to the DFEH at paydatareporting@dfeh.ca.gov to pose additional questions. The DFEH’s FAQs can be found at https://www.dfeh.ca.gov/paydatareporting/.

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The Labor and Employment attorneys at Weintraub Tobin assist employers in all aspects of their employment law compliance, including compliance with California’s Equal Pay Act.  Please feel free to reach out to any of the attorneys if we can be of assistance to you in your employment law compliance.  Stay healthy and stay safe.