Legislative Update: Pay Data Reporting Penalty Increase for Noncompliance (SB 1237)
If you are a large employer, you are likely aware of the annual pay data reporting duties required by California’s Civil Rights Department (CRD). Specifically, on or before the second Wednesday of May of each year, a private employer with 100 or more employees must submit a pay data report to the CRD covering the prior calendar year, also known as the “Reporting Year.” In addition, private employers that have 100 or more employees hired through labor contractors within the prior calendar year shall submit a separate pay data report to the CRD covering the employees hired through labor contractors in the prior calendar year. The private employer shall also disclose on the pay data report the ownership names of all labor contractors used to supply employees. A labor contractor shall supply all necessary pay data to the private employer.
These annual pay data reports to the department must include, among other information, the number of employees by race, ethnicity, and sex, as specified, and, within each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate. Upon request from the CRD, existing law requires a court to impose a civil penalty not to exceed $100 per employee upon any employer who fails to file the required report and not to exceed $200 per employee upon any employer for a subsequent failure to file the required report.
New legislation signed by Governor Gavin Newsom, Senate Bill (SB) 1237, increases the penalty for subsequent failures to file the report described above to an amount not to exceed $1,000 per employee.
According to the author of the measure:
SB 1237 will strengthen enforcement by increasing the penalty for repeated noncompliance from $200 to $1,000 per employee. Increased penalties will serve as a meaningful deterrent against noncompliance and generate additional resources for more proactive enforcement. This bill ensures employers can’t treat pay data reporting as optional and gives CRD the tools it needs to effectively combat wage discrimination. It is a critical step toward ending persistent wage disparities and delivering real pay equity for women.
SB 1237 takes effect January 1, 2027.
The CRD’s website has information your large business will need to properly complete the annual pay data reporting requirement. On its page, you will find the pay data portal, handbook, user guide, excel templates, examples and an FAQ, along with past pay data reporting results.
Do you have any questions about pay data reporting or any other employment law compliance issue? Our firm specializes in taking care of employers’ workplace needs to help keep your business humming throughout the day.
