As most California employers know by now, Senate Bill 1162 requires private employers of 100 or more employees (with at least one employee in California) to report pay and demographic data to the California Civil Rights Department (CRD) (formerly the Department of Fair Employment and Housing). Complicating matters, the law was amended to add a requirement to report data regarding workers hired through labor contractors.
The deadline for submitting pay data reports is May 10. If you are having trouble gathering information from labor contractors, you are not alone. So, if it looks like you might be late on the labor contractor employee report, we recommend seeking an extension from CRD through the portal ASAP. The good news is that extensions are available, but only for the labor contractor reports, and only through the portal. (Link here.) Requests for an extension must be submitted on or before May 10.
As of April 18, 2023, CRD began accepting “enforcement deferral requests” from employers for their Labor Contractor Employee Reports due May 10, 2023. Once granted, CRD will defer – through July 10, 2023 – seeking an order of compliance for the employer to file its Labor Contractor Employee Report.
In light of the new requirement that employers submit pay data reports on their workers hired through labor contractors (Labor Contractor Employee Reports), CRD will consider an employer’s request that CRD defer seeking an order for compliance with respect to a Labor Contractor Employee Report filed after the due date of May 10, 2023. The deferral will be up to and including Monday, July 10, 2023.
Enforcement deferral periods are not available for pay data reports covering an employer’s payroll employees (Payroll Employee Reports).
Beginning April 18, 2023, to request an enforcement deferral period for a Labor Contractor Employee Report, an employer must register in the portal and fill out and submit a request form by May 10, 2023. CRD will not consider requests submitted through any other method, such as email or phone. Nor will CRD consider a request submitted by a third party on behalf of an employer, such as a Professional Employer Organization (PEO); the employer itself must submit the request for itself, and any enforcement deferral period will apply only to that employer.
Background
California’s pay data reporting law, originally enacted in 2020, requires private employers with 100 or more employees to file annual pay data reports with the CRD. In 2022, the law was amended to compel covered employers to additionally report median and mean hourly rates within each job category, for each combination of race, ethnicity, and sex. Significantly, the amendment also added the requirement to report data regarding workers employed through labor contractors.
Who is covered?
- The “Payroll Employee Report” is required by all employers with 100 or more employees located anywhere and for whom the employer is required to withhold federal social security taxes from the employees’ wages, with at least one employee working in California or assigned to a California establishment.
- Employers must file a separate “Labor Contractor Employee Report” if they have 100 or more labor contractor employees anywhere for whom the labor contractor is required to withhold federal social security taxes from the labor contractor’s employees’ wages, with at least one labor contractor employee working in California or assigned to a California establishment.
How is “labor contractor” defined?
- An individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business
What are the penalties for employers that fail to file?
Senate Bill 1162 has added penalties for employers who fail to file required pay data reports. The Department has the power to seek an order requiring an employer who was obligated to file a report and failed to do so to file a required report. The Department is also empowered to seek civil penalties of $100 per employee against an employer who fails to file a required report, with the penalties increasing to $200 per employee for a subsequent failure to file a required report. These penalties are assessable against a labor contractor that has failed to provide required pay data to a client employer. The Department is also entitled to recover its costs in any enforcement action. Gov. Code § 12999(f).