Senate Bill 1162 clarifies CA’s interpretation of the pay transparency, reporting, and record retention requirements, defines “labor contractor employees.”
On January 6, 2023, OutSolve reported on new frequently asked questions (FAQs) which clarified the new pay transparency requirements. Since then, the California Civil Rights Department (CRD) has issued new FAQs specifically to help employers understand the requirements to submit pay data reports on “labor contractor employees.” More information about Senate Bill 1162, can be found in our blog titled “California Senate Bill Increases Pay Data Reporting and Pay Transparency Requirements.”
California updated its FAQs with the following information: If an employer has 100 or more employees employed through labor contractors, they are required to submit a separate pay data report titled “Labor Contractor Employee Report” covering the labor contractor’s employees. They must also disclose the names of all labor contractors used to supply the employees. SB 1162 defines “labor contractor” as “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.” Further guidance indicates that “labor contractor employees” include only workers:
On the payroll of the labor contractor.
For whom federal social security taxes are withheld from the individual’s wages.
Who work for the client employer within the usual course of business.
The law also introduces a new record retention requirement indicating that all employers, regardless of size, maintain records for each employee detailing their job title(s) and wage rate history throughout their employment and for three (3) years after their termination. These records must be available for inspection by the Labor Commissioner upon request.
Considering that the labor contractor usually maintains the pay data information on the employees, it is up to the employer to obtain this data to submit their reports in compliance with California law. If the labor contractor cannot provide the employer with the pay data, the court has the discretion to assign penalties to the labor contractor. Labor contractors must be informed by employers of their obligation to provide annual pay data.
New resources regarding the state’s Pay Data Reporting requirements are now available. All 2022 Pay Data Reports are due by Wednesday, May 10, 2023. Clients needing assistance in filing the California Pay Data Report or who wish to take preventive measures to evaluate their pay practices can contact OutSolve at info@outsolve.com or by calling 888.414.2410. Further information about OutSolve’s Pay Equity Analysis compliance services (Proactive Compensation Solutions) is also available on the OutSolve website.