California Civil Rights Department’s Enforcement Action Highlights Risks in Pay Data Reporting

As the 2023 California pay data reporting cycle commences, a recent enforcement action by the California Civil Rights Department (CRD) serves as a stark reminder of the consequences for employers who fail to comply with mandated reporting requirements.

Private employers with over 100 employees in the United States, including at least one employee in California, are obligated to file annual payroll employee and labor contractor employee reports. Failure to do so can result in penalties of $100 per employee for a first violation and $200 per employee for a second violation.

In a recent case announced on July 5, 2023, a home healthcare company faced legal action from the CRD for its failure to submit employee pay data reports for the years 2020, 2021, and 2022 despite repeated warnings. The company ultimately settled, agreeing to pay approximately $100,000 in penalties and costs and committing to timely filings in the future. CRD Director Kevin Kish emphasized the significance of compliance, stating that companies failing to adhere to California's reporting mandates will face accountability.

The passage of Senate Bill 973 in 2020 empowered California to collect pay data, recognizing persistent gender pay gaps that disproportionately affect women and people of color. The legislation aims to address these disparities, with data from 2021 revealing inequities in pay distribution across demographic groups. In 2022, the Legislature expanded pay data requirements under Senate Bill 1162 to include labor contractors.

Moreover, the CRD has pursued similar cases against large companies, securing two stipulated judgments in 2022. Employers and employees alike can access general information on California's pay data reporting process and seek assistance through CRD's complaint process if they have experienced discrimination.

With the looming deadline of May 8, 2024 for the 2023 pay data, employers must ensure their preparations are in order.

The CRD aims to combat gender and racial wage gaps through annual reporting, encouraging employers to conduct self-assessments of pay disparities and promoting voluntary compliance with equal pay laws. This enforcement action underscores the broad coverage of California's pay data reporting requirements.

If you need assistance filing your annual pay report, please contact us today.