Component 2 Style Pay Data Reporting May Be Coming to California by January 2021

SB 973

With last year’s announcement by the U.S. Equal Employment Opportunity Commission (EEOC) that it will not seek to renew collection of its EEO-1 Component 2 pay data, California appears posted to fill in the void. California’s Senate Bill 973 is based on the EEOC’s former Component 2 pay data reporting, and if signed, will become effective January 31, 2021.  

As background, initiated under the Obama Administration, Component 2 pay data had been anticipated to take effect starting in 2016. However, with the change in administration, such pay data reporting requirement was halted, only to be reinstated by court order as a result of litigation with employee and minority rights advocates, resulting in the requirement to report pay data but only for the 2017 and 2018 years.

Under SB 973, on or before March 31, 2021, a private employer with at least 100 employees and who is required to report to an annual “Employer Information Report” (EEO-1 Component 1) under federal law will be required to submit a pay data report of their workforce akin to Component 2 for the prior calendar year (“the “Reporting Year”).  

The pay data report is required to include the number of employees by race, ethnicity, and sex in each of 10 categories, identical to those found in the former Component 2 reporting. These consist of (A) Executive or senior-level officials and managers, (B) First or mid-level officials and managers, (C) Professionals, (D) Technicians, (E) Sales workers, (F) Administrative support workers, (G) Craft workers, (H) Operatives, (I) Laborers and helpers, and (J) Service workers.

Additionally, the pay data report requires the number of employees by race, ethnicity, and sex whose earnings fall within each of the pay bands used by the U.S. Bureau of Labor Statistics in the Occupational Employment Statistics survey. These counts are reported based on “snapshots” during a simple pay period of the employer’s choice between October and December 31 of the Reporting Year. The pay data report also requires the total number of hours worked by each employee counted in each pay band during the Reporting Year.

For employers with multiple establishments, the employer must submit a report for each establishment plus a consolidated report, including the employer’s North American Industry Classification System (NAICS) code.   

Although the pay data reports are confidential, the DFEH will maintain the reports for at least 10 years and is entitled to publish on an annual basis, and publicize aggregated reports provided that such reports are reasonably calculated to prevent the association with any person or business.

The DFEH is authorized to implement SB 973, including the promulgation of rules and regulations to carry out and enforce SB 973. Express authority includes subpoenas, interrogatories, depositions, document requests, and to seek a court order to compel their compliance.  

SB 973 passed the State Senate and Assembly in late August of 2020 and has been presented to the governor as of September 10, 2020. 

UPDATE: Governor Newsom signed SB 973 into law on September 30, 2020.

To learn more about achieving pay equity, and to receive a free pay gap risk assessment, click here.

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Component 2 Style Pay Data Reporting May Be Coming to California by January 2021
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Component 2 Style Pay Data Reporting May Be Coming to California by January 2021
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Mandatory Pay Data Reporting May Be Coming to California Soon
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