On September 30, 2020, California Governor Gavin Newsome signed SB 973 into law, which requires private employers with more than 100 employees (irrespective of employee’s location) to report certain pay data to the Department of Fair Employment and Housing (DFEH) by March 31, 2021 and on a yearly basis thereafter. While California will be the first state to require such employee data be submitted to state agencies, the general requirements of SB 973 won’t be new to many employers.
Existing federal law currently requires certain employers file with the Equal Employment Opportunity Commission (EEOC) an annual Employer Information Report (EEO-1) which contains employee data. SB 973 seems to mimic the Federal law and posits that on or before March 31st of each year (starting March 2021), private employers in California with 100 or more employees who are also required to file an annual report with the EEOC, must submit pay data to the DFEH related to its employees covering the prior calendar year. For purposes of SB 973, an employee is an individual on an employer’s payroll whom the employer is required to include in an EEO-1 report and for whom the employer is required to withhold federal social security taxes.
The DFEH will maintain data for a minimum of 10 years and is generally prohibited from making public any personally identifiable information contained within the data submitted. Personally identifiable information submitted to the DFEH under SB 973 requirements would generally be treated as confidential information and most often will not be subject to a California Public Records Act request.
Employers subject to SB 973 generally have to report the following:
The number of employees by race, ethnicity, and sex for the following job categories: executive or senior level officials and managers; first or mid-level officials and managers; professionals; technicians; sales workers; administrative support workers; craft workers; operatives; laborers and helpers; and service workers.
The number of employees by race, ethnicity, and sex who make an annual amount within each of the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics survey (including the hours worked by each employee)
Employers with multiple establishments will have to file a single report for each establishment and file a consolidated report that includes all employees. In submitting the data, employers are permitted to provide clarifying remarks on the data, but are not required to do so. Employers are permitted to submit a copy of their EEO-1 Report to satisfy their reporting requirements under SB 973. Failure to comply with SB 973 or provide the required data may result in the DFEH or the Employment Development Department (EDD) seeking an order requiring compliance and the DFEH or the EDD are entitled to recover any costs associated with seeking such an order.
On November 2, 2020, the DFEH issued a frequently asked questions (FAQ) page to assist with compliance. The current FAQs provide background information on why this data needs to be collected, whether the pay data submitted will be publicly available, various data privacy and protection concerns, and answers other miscellaneous questions to ensure compliance. More information from DFEH and EDD to assist employer-compliance will most likely be released as we get closer to the filing date requirement.
