New law requires private employers to give state pay data

Gov. Gavin Newsom signed a bill that aims to address pay gaps based on gender and race, which is modeled on a federal effort the Equal Employment Opportunity Commission abandoned last September.

When it goes into effect Jan. 1, Senate Bill 973 will require private California employers with 100 or more employees to annually submit pay data to the Department of Fair Employment and Housing. Employers will have to organize data on compensation and hours worked according to gender, race, ethnicity, and job category.

The annual deadline for employers to submit this data is March 31.

By requiring employers to collect and submit this data, state agencies will be better able to identify patterns of wage disparities and enforce wage discrimination laws, said in a statement released by the office of author Sen. Hannah-Beth Jackson, D-Santa Barbara. The process will also encourage employers to reflect on and self correct their own pay practices, the statement added.

In early 2016 under the Obama administration, the Equal Employment Opportunity Commission announced it would revise the EEO-1 form, an annual compliance survey for employers mandated under Title VII, to collect data on their employees' earnings and hours worked. This data had to be categorized according to ethnicity, race, and sex.

The Office of Management and Budget approved the revised EEO-1 form in September of the same year, but under the Trump administration in 2017, the office stayed implementation of the changes. In March 2019, a federal judge in the District of Columbia vacated the stay, and employers were required to submit pay data through the EEO-1 form for 2017 and 2018.

Some stakeholders welcomed the Equal Employment Opportunity Commission's announcement last year it would not ask the Office of Management and Budget to renew its request for authorization to collect pay data through the EEO-1 form. Among these were the U.S. Chamber of Commerce, which also asked Newsom to veto SB 973 in a Sept. 17 letter.

"Of crucial importance to whether S.B. 973 should be vetoed is that the data collected... is worthless with respect to identifying incidents of pay discrimination to the EEOC, or would be to the California agencies," the Chamber wrote. "EEOC now describes this data as having 'unproven utility.'"

But Jackson, who also authored California's Fair Pay Act in 2015, said SB 973 is needed in the state.

"The pay gap is especially concerning for women of color with African American women earning 61 cents and Latinas just 42 cents for every dollar earned by white, non-Hispanic men," Jackson said in a statement. "With the Governor's approval of SB 973, California is taking another important step toward true pay equity."