California Senators have submitted a bill that seeks to expand the way compensation data is reported to the state starting next year. Senate Bill 973, if passed, will require all employers with a minimum of one hundred employees to submit annual compensation data reports to the Department of Fair Employment and Housing (DFEH) starting March 2021. The new reports need to indicate sensitive information about workers – including, but not limited to, each person’s race and sex.
This effort is similar to the 2019 attempt to get employers to submit EEO-1 reports to the United States Equal Employment Opportunity Commission (EEOC) – which was abandoned shortly thereafter, mainly due to high data collection expenses as well as the failure to harvest usable data efficiently. The program was opposed by many parties on the employer-side, stating that the information being collected was useless because of the presence of other determining factors that had not been taken into consideration. They went on to cite that the W-2 wages that were the subject of these EEOC reports would fail to reflect the reasons behind certain decisions employers needed to make for individual workers (overtime payments, plan contributions, etc), and that any findings may just end up becoming misleading, erroneous pieces of data.
The main purpose behind SB973 is to focus a spotlight on whether there are unfair compensation practices based on any employees’ skin color, gender, and more. It intends to support and enforce the State’s policies on pay equity and get any erring organizations to comply with the proper practices. The bill has already been passed by both Assembly and Council and is currently sitting at the desk of Gov. Gavin Newsom, who is expected to sign it into law. This should serve as fair warning to California business owners to begin their own investigations on whether they are compliant with the current compensation laws – and to begin addressing any possible problems as early as possible.
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