California Revives EEO-1 Component 2 Data (Pay Bands) Reporting At State Level

California Revives EEO-1 Component 2 Data (Pay Bands) Reporting At State Level

On September 30, 2020, California Governor Gavin Newsom signed SB 973 into law.  SB 973 requires that – starting on March 31, 2021 (and thereafter annually) – private employers of 100 or more employees that also are required to file annual Employer Information Reports (EEO-1) pursuant to federal law (“Covered Employers”) also must submit annual pay data reports to the Department of Fair Employment and Housing (“DFEH”) that contain specified wage information.  As between EP and its production company clients, it is the production companies as the EEO-1 employers that must file the pay data reports with the DFEH for their talent and crew.

Specifically, SB 973 requires Covered Employers to submit a pay data report each year to the DFEH that covers the prior calendar year, or the “Reporting Year.”  The report must identify the number of employees by race, ethnicity, and sex across 10 different job categories (similar to the EEO-1 categories), which include (1) executive or senior level officials and managers; (2) first or mid-level officials and managers; (3) professionals; (4) technicians; (5) sales workers; (6) administrative support workers; (7) craft workers; (8) operatives; (9) laborers and helpers; and (10) service workers (“Category 1 ”).  The report also must identify the number of employees by race, ethnicity, and sex, whose annual earnings fall within each of the twelve (12) earnings pay bands used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey (“Category 2”).

In establishing the employee population to be reported for purposes of Category 1 (demographics), Covered Employers must create a “snapshot” that counts all individuals in a job category by race, ethnicity, and sex, employed during a single pay period of the employer’s choice between October 1 and December 31 of the “Reporting Year.”  And in establishing the numbers to be reported for purposes of Category 2 (pay bands), Covered Employers must calculate the total earnings (i.e., the W-2 earnings) for each employee in the “snapshot” for the entire “Reporting Year,” regardless of whether or not the employee worked for the full calendar year.  Covered Employers must then tabulate and report the number of employees whose W-2 earnings during the “Reporting Year” fell within each pay band.  And the report must include the total number of hours worked by each employee counted in each pay band during the “Reporting Year.”

For Covered Employers with multiple “establishments,” the employer must submit (1) a report for each establishment; and (2) a consolidated report that includes all employees (and include the NAICS code).  An “establishment” is defined as an economic unit producing goods or services.  The report must be submitted in a searchable format.  And a Covered Employer may satisfy its obligation under this law by submitting its federal EEO-1 Report, if the EEO-1 Report contains substantially similar pay data information as that required by SB 973.

This new law is expected to have a major impact on the entertainment industry.  As the responsible Covered Employer, production companies will need to track talent and crew by race, gender, and ethnicity, as well as track annual wage (W-2 earnings) pay, across the 10 job categories specified above.  While SB 973 makes no reference to mechanisms for enforcement, including what penalties, if any, will be assessed for a failure to comply, the DFEH is expected to issue regulations as well as a reporting template. 

EP currently provides its clients with assistive EP data reports derived from client-submitted payroll start cards to support client compliance with EEO-1 reporting and is exploring to do the same for clients with respect to the new California pay data reporting requirements imposed by SB 973.  EP will update its clients further after the DFEH issues regulations on implementation of this new law.

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For any questions about this Alert, you may contact:

Pantea Lili Ahmadi, Senior Corporate & Employment Counsel | pahmadi@ep.com

Scott Bishop, Vice President, Employment Law | sbishop@ep.com

Joe Scudiero, Senior Vice President & Chief Labor Counsel | jscudiero@ep.com