Business risk management can be daunting, but PEOs are changing the game in business. Learn how they can be your company’s lifesaver.
California CRD Pay Data Reports: What Employers Should Know
If you have at least one employee working in or from California, you may need to comply with the California CRD Pay Data Reports requirement.
In an effort to shrink the pay gap among genders, particularly those of racial or ethnic minorities, the California Civil Rights Division (CRD) passed a bill in 2020 that requires certain employers based in or out of California to report their payroll data annually. After changes were made to the bill in 2022, even more employers are now required to comply with pay data reporting.
Here is what you need to know.
Large employers (100+ employees) must comply with the California Pay Data Report
Private employers with 100+ total employees nationwide must comply with the California pay data reporting requirement if even just one employee works in California, is assigned to a California-based division, or if they work remotely in California for any company. So, for example, if you have a software company based in Kansas that employs 99 workers there at company headquarters and 1 employee who works remotely in California, you must comply.
However, for the actual report, you only need to include employees who work at a California-based company, are assigned to a California-based division, or who work remotely from California. In our example above, you would only need to supply information about the one employee working remotely in California and exclude the 99 in Kansas. If you had one division in California with 50 in-person employees and 3 remote workers from Nevada assigned to that division, as well as 50 employees in Nevada working for the Nevada division, you would only report on the 53 employees working in or assigned to the California-based division.
When calculating employee headcount, the total is per person rather than full-time equivalent. So, if you employ 80 part-time employees and 25 full-time employees, you have 105 total employees for the purposes of this law. Employees on paid or unpaid leave are counted, and seasonal employers with 100+ workers during their season, regardless of the length of season, must also comply.
Employers with 100+ labor contractor employees also must comply with the California Pay Data Report
Private employers with 100+ employees from one or more labor contractors are under the same obligation to comply with the California pay data reporting requirement if even just one person works in California, is assigned to a California-based division, or who works remotely from California. These workers are not 1099 independent contractors, but employees for whom a labor contractor withholds federal social security taxes from wages and works for the client employer. In most cases, these will be employees provided by staffing companies.
If you use multiple labor contractors, aggregate the total number of contracted workers to determine if you have a sum of at least 100 labor contractor employees. Employers with 100+ labor contractor employees (with at least one connected to California) will submit just one Labor Contractor Employee Report, even if they use multiple contractors.
The Labor Contractor Employee Report is separate from the Payroll Employee Report. Your company must individually meet the employee threshold requirements to have to submit data for both reports.
What is included in the California Pay Data Report?
The data you must enter in the CRD pay data portal includes information about your business, its parent company, any affiliates, and the required payroll details. If you have employees who work outside of California, you only need to include data about your employees who report to a California-based business or who work remotely from California.
Determine Your “Snapshot Period” to Establish Which Employees Should be Included
To gather the required payroll details, you must first choose a single pay period between October 1 and December 31 of the previous year to be your “Snapshot Period.” Defining this period will determine which employees you report on for the year, as most employers experience turnover. You must report on all employees that were employed at any point of the snapshot period, even if they were newly hired, quit, or were unpaid for that time period.
Job Categories by Establishment
With this Snapshot Period defined, you now must group together pay data by establishment. Each employee will need to be assigned to one of the following job categories:
- Executive or senior level officials and managers
- First or mid-level officials and managers
- Sales workers
- Administrative support workers
- Craft workers
- Laborers and helpers
- Service workers
Within each job category, employees must be identified by sex with the options of male, female, or non-binary. If employees decline to self-identify their sex, refer to employment records or their self-identified pronouns.
Each employee must also be identified by one of the following race/ethnicity categories:
- 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
The CRD recommends employees self-identify to state their race/ethnicity, if not already done in their employment records. In the event employees decline to self-identify their race or ethnicity, you may identify them based on observation.
You will need to refer to each employee’s total earnings reported in Box 5 of their previous year’s W-2 to determine which pay band they fall under, as established by the U.S. Bureau of Labor Statistics. It’s possible an employee could have a high hourly rate but only worked part-time, placing them in a lower pay band than they would have, had they worked full-time.
Number of Employees
As a summary of your data, you will enter the total number of employees per establishment with the specific combination of job category, race/ethnicity, sex, and pay band. Some groupings may only have one employee.
Mean and Median Hourly Rates
All employee reports must also include the mean (average) and median (middle point) hourly rates of employees in the same combinations of establishment, job category, race/ethnicity, and sex. If there is only one employee in a grouping, the mean and median will be the same numbers.
You will need the total number of hours each grouping (combination of establishment, job category, race/ethnicity, and sex) worked from the previous year, rounding to the nearest whole number.
Will the public see my employer pay data?
No, the law prohibits publicly disclosing any “individually identifiable information” for either a person or business.
When is the California CRD Pay Data Report due?
This annual report is based on pay data from the previous year and is due on the second Wednesday of each May. To submit the reports, go to the CRD pay data portal.
How will Stratus HR help me with this?
If you are a client of Stratus HR and meet the required employee threshold, our team will send you the applicable employee payroll data needed for the payroll report. You will then need to certify the report, register your company in the CRD pay data portal, complete all fields about your company, and enter the payroll data provided by Stratus.