In recent years, California has introduced laws that push for more openness in how employees are paid. One important rule in this effort is called California pay data reporting. This law requires larger companies to provide information about how their workers are paid, broken down by gender, race, and other factors. The aim is to give the state a clearer picture of how wages are distributed across different groups. The team at Nakase Law Firm Inc. helps employers meet the demands of California pay data reporting and avoid problems that may arise during the process.
A Closer Look at California Pay Data Reporting
California’s pay reporting law began with Senate Bill 973 and was later expanded by Senate Bill 1162. If a business has 100 or more employees, and at least one of them works in California, it is required to report pay data each year to the California Civil Rights Department (CRD). These rules don’t just apply to full-time staff. If a business uses workers through staffing companies or labor contractors, those workers must also be included in the report. This means that even companies based outside California are subject to the rule if they have someone working in the state. The purpose is to help ensure people are being paid fairly for their roles, regardless of their background. The attorneys at California Business Lawyer & Corporate Lawyer Inc. regularly assist fair chance employers who want to understand these laws and maintain practices that meet state expectations.
Who Has to Report and When
Here’s a quick overview of who needs to send in a report:
- Any private company with 100 or more workers, as long as at least one is based in California
- Any company that is required to file a federal EEO-1 report
- Any business that uses 100 or more labor contractor workers
Businesses must send separate reports for direct hires and contracted workers. Overlooking this detail can lead to issues.
The CRD expects these reports to be filed by a fixed date each year, and employers who miss the deadline could face fines.
What the Report Needs to Include
Employers must provide detailed information. Each report must show:
- What type of job each worker does, using a standard job category system
- The pay range for each worker, based on their actual W-2 income
- How many hours each person worked during the year
- Demographic details including gender, race, and ethnicity
The data must be organized carefully and sent to the CRD using its official online portal. The report must follow the layout and structure set by the state.
Errors can lead to delays, and repeated mistakes may raise red flags with the state.
Submission Deadline and Reporting Period
The report is due each year in the spring. For 2025, the deadline is May 14. The reporting period usually covers the last three months of the previous year.
Preparing in advance is recommended. Checking your payroll records early gives you time to make adjustments if something doesn’t add up.
Changes Introduced by SB 1162
Senate Bill 1162 made several additions to the original rules. Some of the main updates include:
- Employers must now include workers hired through staffing firms
- The state has more power to act if a business does not comply
- Fines start at $100 per employee for missing or incomplete reports, and can increase for continued violations
The law also requires companies to provide pay ranges in job advertisements. If a current employee asks for the pay range for their own job, the company must give it to them.
The Purpose Behind the Reporting Rule
The point of California pay data reporting is to bring attention to pay patterns that may not be fair. By reviewing this data, the state can tell if certain groups of workers are not being paid the same as others doing similar work.
This reporting can also help employers find and fix gaps in their pay structure. In many cases, companies have discovered issues they weren’t aware of. It’s also a way to show current and future employees that pay practices are fair and consistent.
Common Mistakes Employers Make
Even well-run companies can make mistakes. Some of the more common ones include:
- Assigning the wrong job classification to employees
- Reporting incorrect pay figures
- Entering the wrong number of hours worked
- Mixing up data between direct hires and contractors
Companies can prevent these errors by keeping clear records, checking their classifications, and reviewing demographic data. It’s often useful to work with payroll experts or legal professionals.
What Happens If You Don’t File Correctly
If a business misses the deadline or makes serious mistakes, there are consequences. The state can charge $100 per worker for a first mistake. If it happens again, that number jumps to $200 per worker.
Beyond fines, the state might also take other steps, such as requiring the company to correct the report or go through a review. Negative attention can also lead to public criticism or loss of employee trust.
How Legal Support Can Help
Reporting requirements can be confusing, especially when trying to match job roles with categories and making sure all wage data is correct. That’s why it helps to work with someone who understands the law.
A legal advisor can assist with:
- Reviewing pay data and job categories
- Making sure demographic records are accurate
- Correcting errors before the report is submitted
- Offering advice on internal pay policies
This kind of support gives businesses more control over the process and lowers the risk of problems later.
Moving Toward More Balanced Pay Practices
This reporting isn’t just a task for compliance. It’s also a way to reflect on how pay is managed inside a company. Workers notice when companies take the time to evaluate pay systems and make sure people are treated fairly.
That kind of effort can improve morale, build trust, and help with long-term employee stability. Businesses that stay ahead of pay issues are often in a stronger position when it comes to hiring and keeping good workers.
Planning Ahead for Future Reports
The best way to stay on top of these requirements is to begin early. To prepare for the next cycle, companies should:
- Review and clean up their payroll data
- Make sure employee records are current
- Get legal or HR guidance before filing
- Use the tools available from the CRD to stay organized
Getting ahead of the reporting timeline helps companies avoid stress and allows time to make any necessary changes.
