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The DFEH Shares Additional Guidance on Submitting California Pay Data Reports

In September of 2020, California passed Senate Bill 973– which requires private employers with over 100 employees  to submit an annual Pay Data Report to the Department of Fair Employment and Housing (DFEH). Two months later the DFEH released a list of frequently asked questions (FAQ) that provided some guidance but still left questions unanswered and mostly emphasized that the specifics of these questions would be answered at a later date.

The DFEH released updated guidance and added answers to their FAQ page on February 1, 2021. Additionally, they posted a User Guide, Excel Template, and .CSV example to assist with the completion of the pay data report. The user guide includes an overview of the portal that will be used to upload the required Pay Data Report along with detailed instructions on how to fill out and certify the report. The Excel and .CSV template offers instructions on how to fill out the report in various formats.

Updated FAQs

The updated FAQs expand on several issues that were left unanswered or unclear, including:

  • How to address remote employees
  • The appropriate way to measure pay
  • A clear definition of the required snapshot period
  • How to calculate hours worked for exempt vs non-exempt employees

Furthermore, the FAQs dive into the reality of having a remote workforce and how that may affect whether an employer is required to file a Pay Data Report. The DFEH clarified that employees assigned to a non-California establishment, but are working remotely from California during the snapshot period, must be accounted for.

They also explained that W-2 Box 5 – Medicare wages and tips must be included and that the W-2 Box 1 – Wages should be used with clarifying remarks if any employee has wages that were not reported in Box 5. 

It is also worth noting that the DFEH does NOT allow Professional Employer Organizations (PEO’s) to submit a Pay Data Report that covers multiple employers and ultimately, the responsibility to ensure compliance of the Pay Data Report requirements falls on the individual employer.

The User Guide

The guide explains what type of employer is required to file a Pay Data Report and emphasizes that an employer is required to file if it has just one employee in California during the snapshot period. It also offers instructions on how to fill out the Pay Data Report which includes an explanation of the different codes that are to be assigned to employees based on job, race/ethnicity/gender, and pay classification.

In the instructions they state that they will be adopting the categories used in the federal EEO-1 Component 1 & 2 for Job, Race/ethnicity, and pay category but not for gender. The Excel and .CSV file examples include examples of necessary employer/employee and establishment information for both single and multi-establishment employers.

The deadline to submit the Pay Data Report is March 31. California employers and any employer with employees assigned to California should review the requirements to ensure compliance.

Is there anything Payroll Systems can help you with as you accommodate rapid legislation changes? Reach out and talk to us about the easy-to-scale solutions you need for your business.

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.