New bill to change pay data reporting requirements

| Feb 5, 2021 | employment law

Finances are often a priority for both employees and employers. That is why one of the most common issues employers face often involve wage and hour claims. Whether employees claim they did not receive proper pay for their overtime work, or that they experienced pay discrimination, these complaints can be complicated for employers.

Employers could face even more scrutiny – and legal penalties – if a new bill becomes law.

New wage and hour reporting proposed for employers

In an effort to reduce the rate of wage discrimination, Senate Bill 973 would alter California employers’ obligations when reporting pay data.

The bill would require private employers with more than 100 employees under them to report wage and compensation data to the California Department of Fair Employment and Housing (DFEH). Employers will be required to report this data annually by March 31 starting in 2021. And each year, this report must include information regarding:

  • Specific job categories
  • Employees’ race or sex
  • The employee’s earnings
  • The total hours they worked

The DFEH would have the authorization to conduct an investigation and submit employers to legal consequences if they find discrepancies in these reports.

As of September, the bill is likely to become law, as it passed the state legislature. Now it only needs Gov. Newsom’s signature.

Precise pay-equity audits are essential

Laws like SB 973 tend to increase the risk of employers facing considerable fines or even litigation – especially if they are not careful to comply with new and current laws.

Therefore, all employers should take care to:

  • Review the new requirements of the bill;
  • Reassess their recordkeeping policies; and
  • Conduct proactive and thorough pay-equity audits.

Pay audits are essential, but employers must take them seriously. They must ensure they have valid, legal reasons if there are any differences in an employee’s wage.

Wage and hour disputes might be some of the most common sources of employment litigation, but employers can reduce the risks they face if they take care to analyze their pay practices and policies closely and ensure they comply with state and federal laws and requirements.