California employers have until May 8, 2024, to report their 2023 pay data.
Employers might be familiar with the original pay data law passed in 2020 and the amendments made in 2022, but there are a few updates to catch up on. Changes have been made to the reporting templates, requiring some additional information.
Changes Made for Remote Workers
For remote worker data, three new data fields have been added to the report. The fields include the number of workers that aren’t remote, the number of remote workers in California, and the number of remote workers outside of California assigned to a California establishment.
For pay data reporting, the term “remote worker” is limited to employees who are entirely remote, teleworking, or home-based and aren’t going to regularly report in person to a physical establishment to perform their work duties. This doesn’t include workers who have a hybrid or partial teleworking schedule.
“Unknown” Reporting for Demographic Information
Although the CRD allowed employers to report “unknown” race or ethnicity for their labor contract employees, this is no longer permitted. It is now required for employers to have this information from labor contractors.
Noncompliance Penalties
Employers who fail to comply with this new pay data reporting requirement will face penalties. For non-filers, there are penalties of $100 per employee, which can increase to $200 per employee if they fail to file a required report.
Steps to Take as an Employer
To avoid any penalties as an employer, here are three steps to take.
1. Payroll Employee Report vs. Labor Contractor Employee Report
You will need to determine which of these reports you’ll need to file, even if workers are based outside of California.
A private employer with 100 or more hired labor contractors in the prior calendar year, with at least one worker based in California, must file a separate Labor Contractor Employee Report. Labor contractors are entities that provide workers, with or without contract, to a client employer for the purpose of performing labor in their normal course of business.
It’s important to review whether or not this will need to be filed. For example, if you did not file a payroll report for your employees last year because there were fewer than 100, check to see if the number of employees has increased. This may require that a new report be filed.
2. Identify Labor Contractors and Request Pay Data Report Information
It is important to identify any labor contractors you use and send them written requests for the information required to complete the Labor Contractor Employee report.
Labor contractors must comply with the requests and are subject to penalties if they do not. However, the responsibility to file a report rests on the employer who uses the labor contractors. Thus, please send your written request to labor contractors as soon as you can to give them time to gather information.
3. Submit Before Deadline
Make sure you make the May 8 deadline.
Assign a person or group who will be responsible for collecting all the information for the Payroll Employee and Labor Contractor Employee Reports and submitting the reports before the deadline. Although there is still some time, start early in order to ensure compliance.