Quick reminder that California’s pay data reporting deadline is quickly approaching. Any employer with 100 or more, with at least one worker in California must comply with the state’s updated reporting requirements by May 8, 2024. How and if employers use, supply, or otherwise hire contractors will separately affect how those employers are covered under this law. In other words, this may apply to a wide variety of employers, regardless of their location.
What’s new?
The California Civil Rights Department (“CRD”) published recently updated FAQs that outline this year’s changes in detail, and provide a helpful summary of last year’s changes. These are worth a close read, particularly for employers who do not outsource this function to external payroll providers.
A few of the more important updates:
- New Reporting Templates, Examples, and Training Slides
- The CRD confirmed in its new FAQs that it will reject reporting submissions using any prior templates. The CRD provides updated forms, among other resources here.
- Remote Worker Reporting
- This year, covered employers must report whether any employee worked remotely during the applicable “Snapshot Period.” CRD’s FAQ page, linked above, provides relevant definitions for the Snapshot Period, remote workers, and other terms, including how hybrid work models apply.
- Job Categories
- Under existing law, employers must assign workers only one of 10 job categories in their reporting. The CRD provides guidance if an employee worked more than one category during the relevant period.
- “Unknown” Is Unauthorized
- In prior years, California allowed employers to answer “unknown” under the ‘race/ethnicity’ or ‘sex’ categories on Labor Contractor Employee Reports. This year, answering “unknown” is not allowed. CRD requires the following answers to each category instead:
- For race/ethnicity: Include one of the following for each individual:
- Hispanic/Latino
- Non-Hispanic/Latino White
- Non-Hispanic/Latino Black or African American
- Non-Hispanic/Latino Native Hawaiian or Other Pacific Islander
- Non-Hispanic/Latino Asian
- Non-Hispanic/Latino American Indian or Alaskan Native
- Non-Hispanic/Latino Two or More Races
- For sex/gender: Report whether an individual falls under or identifies as one of California’s three officially recognized genders:
Collecting accurate and up to date records and information for workers is crucial to complying with reporting obligations for these categories.
Why the reminder?
Generally
Laws change (see above), workforces change, people move, and people forget. CRD publishes some notable examples of penalties for compliance violations to signal that employers have a strong incentive to double-check their obligations, including those companies located primarily out of state or who use contractors. Employers should consult with qualified legal counsel to assess their obligations or possible exposure in any of these circumstances.
Remote Workers
As the new rules indicate, employers must account for remote workers, which may create added uncertainty as to which employers are actually covered. For example, if a company has 100 employees and one employee moves to California where they work from home, this will nonetheless trigger California’s reporting obligation if the company had notice the employee made this move.
M&A Contexts
CRD’s guidance also confirms these requirements will indeed apply in the context of mergers and acquisitions. For example, if a 50-employee company merges with a 60-employee company and one or more of those 110 employees work in California, CRD explains that this will trigger the surviving entity’s reporting obligations. CRD further clarifies how these rules may apply where the surviving entity lacks access to a legacy company’s pay data, or how these rules apply to spinoffs.
The deadline is fast approaching.
