Seyfarth Synopsis: The reporting deadline for the 2023 California pay data reporting cycle is only six weeks away. Employers with at least 100 employees with at least one California employee must file their Pay Data Report with the California Civil Rights Department (CRD) by May 8, 2024. While the reporting requirements are largely the same as the 2022 reporting requirements, the CRD now requires information on remote workers and labor contractor demographic data.
With California's May 8, 2024, pay data reporting deadline right around the corner, California employers should ensure compliance with the CRD's reporting requirements. To help with these obligations, here is your helpful summary of the CRD's recent changes requiring reporting on remote workers and labor contractor demographic data that you did not have to deal with the last time around.
What Do I Need to Know About Remote Workers?
New for the 2023 reporting cycle is a requirement that both payroll and labor contractor employee reports include information regarding the number of employees per employee group who worked remotely. Specifically, the data templates ask for:
- the number of employees that do not work remotely,
- the number of remote employees located within California, and
- the number of remote employees located outside of California.
This has been a sizable undertaking for many employers who do not necessarily maintain this information in an easily accessible format.
The recently published CRD Frequently Asked Questions define a "remote worker" as "a payroll or labor contractor employee who is entirely remote, teleworking, or home-based, and has no expectation to regularly report in person to a physical establishment to perform work duties."
Many workplaces utilize hybrid working models in which employees split time between the physical office and their home. For hybrid employees or those who are in a "(partial) teleworking arrangement," a common question that has arisen is how to approach reporting and whether the individual qualifies as a remote worker. The FAQs explain that "employees in hybrid roles or (partial) teleworking arrangements expected to appear in person to perform work at a particular establishment for any portion of time during the Snapshot Period would not be considered remote workers for pay data reporting purposes." Therefore, the key consideration is the employee's status and work location during the Snapshot Period (i.e. a single pay period between October 1, 2023 and December 31, 2023).
Do I Need Labor Contractor Demographic Data This Year?
The short answer to this common question is, "yes." Last year, the CRD granted an exception that permitted using "unknown" for race, ethnicity, or sex of labor contractor employees. However, "unknown" is no longer an acceptable response and demographic data is now required for labor contractor employees.
The CRD provides a few options for collecting this information, the preference being voluntary self-identification. If a worker declines to provide the information, employers must use one of three other options provided by the CRD: (1) current employment records, (2) other reliable records or information, or (3) observer perception. The CRD explicitly acknowledges the risk of inaccurate data using the observer perception, and instructs employers that observer perception should be a last resort.
What Are The Penalties?
There are a number of enforcement mechanisms for employers who fail to comply with the pay data reporting requirements. The CRD is actively pursuing non-filers and has already issued fines to companies that fail to file the required reports. To that end, the Department has the authority to seek:
- Civil Penalties: Employers who fail to file a required report can be assessed penalties of $100 per employee. The penalties increase to $200 per employee for a subsequent failure to file a required report and may also assessed against a labor contractor for failing to timely provide pay data necessary to complete the required filing.
- An Order to File: The CRD may seek an order requiring an employer to file a required pay data report;
- Recovery of Costs: The CRD may recover its costs in any enforcement action.
Accordingly, employers should take care to timely file the required reports.
CRD Pay Reporting Resources
As we previously wrote, the CRD has made several resources available to assist employers with their pay reporting obligations, including:
- Frequently Asked Questions (published February 2024)
- Pay Data Reporting Portal User Guide
- Pay Data Reporting Templates
Workplace Solutions
Given the new reporting obligations, covered employers should ensure they have all required categories of data ready to submit for the upcoming deadline. Please contact the author or your favorite Seyfarth attorney with any questions about complying with California's pay reporting requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.