California Pay Gap Reporting: What You Need to Know

To find the full text, refer to California’s Pay Data Reporting law.

A pay data report in California is typically filed by a legal entity. Affiliated entities that comprise an integrated enterprise can, but are not required to, file a combined pay data report covering multiple legal entities. Syndio does not provide legal advice so we recommend you speak with your legal counsel about whether you wish to file as an integrated enterprise.

The requirement in California requires reporting gender and race/ethnicity gaps.

Syndio’s PayEQ solution allows you to analyze pay equity and opportunity gaps across multiple dimensions, including race, gender, ethnicity, age, disability, and more. This provides a comprehensive understanding of how different groups are affected by your policies and practices.

A payroll employee is an individual on an employer’s payroll for whom the employer is required to withhold federal social security taxes from that individual’s wages.

No. Independent contractors are not considered Labor Contractor employees for California’s Pay Data Reporting law requirement.

In California, the penalties include civil penalties of $100 per employee against an employer who fails to file a required report, with the penalties increasing to $200 per employee for a subsequent failure to file a required report.

These penalties are also assessable against a Labor Contractor that has failed to provide required pay data to a client employer in a timely fashion. California’s Civil Rights Department (CRD) is also entitled to recover its costs in any enforcement action.

The “snapshot period” is used by employers to identify the employees to be included in the pay data report submitted to the government. For the payroll report, the snapshot period is a single pay period between October 1 and December 31 of the reporting year.

No. Unlike pay gap reporting laws in other jurisdictions, which are available at the company level to the general public, the California pay data report will not be public information. 

Even though the reports are not public-facing, there is still reputational risk for employers. According to the California’s Civil Rights Department (CRD) FAQs, “Employers’ pay data reports allow CRD to more efficiently identify wage patterns and allow for effective enforcement of equal pay or anti-discrimination laws, when appropriate.” Also, the CRD analyzes and releases aggregate data across companies. This matters because a company’s data could be compared — potentially unfavorably — to the CRD’s aggregated dataset.

Yes, in addition to requiring pay gap reporting, California also requires employers to share pay ranges. 

California’s Equal Pay Act requires that employers with 15+ employees must disclose the wage scale or salary range on every job posting. Employers with any employees in California must provide pay scale information to applicants “upon request” and provide employees the pay scale for their current position upon request.

Pay transparency requirements continue to grow across the U.S. There has been a steady drumbeat of new legislation, with states like California that broke pay transparency ground early inspiring others to shape their own unique regulations. See Syndio’s U.S. Pay Transparency Cheat Sheet for the latest list of U.S. jurisdictions that require sharing pay ranges.

Employers must use the Civil Rights Department’s pay data portal to submit their reports. CRD will not accept reports by email or hard copy. Syndio makes it easy to prepare your reports for submission to the CRD.

Syndio provides software and expert professional services to help multinational organizations comply with pay equity, pay reporting, and pay transparency regulations. Syndio helps you analyze, remediate, explain, and report on gaps so you can stay on top of compliance in California. Learn more: https://synd.io/global-pay-reporting/.

The law in California analyzes pay gaps, not pay equity. What’s the difference? 

An unadjusted pay gap (also called an “uncontrolled pay gap”) is the difference between the median or mean pay of two groups, such as men and women.

• Median pay gap: Imagine lining up all the earnings for two groups of employees (e.g., men and women) from lowest to highest. The median pay gap is the difference between the middle earnings in each line. It’s a good indicator of typical pay differences.
• Mean pay gap: This compares the average earnings of each group. However, it can be skewed by extremely high or low earners.

Pay equity, or the adjusted pay gap, accounts for factors that can legitimately explain differences in pay, such as performance ratings, tenure with the company, or location.

The median and mean pay gaps provide valuable insights, but they don’t tell the whole story. There may be legitimate reasons for pay differences between employees. The adjusted pay gap (pay equity) accounts for these factors, revealing whether a pay disparity truly exists (which is unlawful in many countries) so you can take corrective action. Syndio’s PayEQ software is the trusted solution for global enterprises to rapidly identify, address, and prevent pay disparities.