California Pay Data Report Filing Platform Opens on February 3, 2025: A Preview of What Is to Come

Quick Hits

• The deadline for filing the 2024 California pay reports is May 14, 2025, and the filing platform will open for new filings on February 3, 2025.
• California requires covered employers to file payroll employee reports for their own employees and requires covered employers to file labor contractor employee reports for their labor contractor employees.
• The California Civil Rights Department has taken legal action against employers that have failed to file payroll employee reports and encourages client employers to report labor contractors that fail to provide necessary information.

California law mandates that private employers with one hundred or more employees, including those hired through labor contractors, must annually submit a pay data report to CRD, detailing employee pay, demographics, and other workforce data, including mean and median hourly wages broken down by race, ethnicity, and gender for each job category; failure to comply can result in penalties of up to $100 per employee for the first offense and $200 per employee for subsequent violations.

Continued Pressure on Labor Contractor Reporting

California began requiring the filing of labor contractor employee reports during the 2022 filing cycle. These reports require private employers with one hundred or more workers hired through labor contractor employers in the prior calendar year with at least one labor contractor employee based in California during the applicable snapshot period to file a labor contractor employee report with California. These reports also provide a window into the pay and demographic information for California labor contractor workers, and an expansion of CRD’s view of employers’ pay practices. This additional reporting requirement complicates the pay data reporting process for California employers because while they are required to file the labor contractor employee reports they must rely on labor contractors to supply this information. This has placed California employers—referred to as “client employers” in the labor contractor employee context—in a difficult position as they are dependent on an outside party to provide detailed demographic, pay, and hours worked information that they must file with CRD. If client employers do not file this information with CRD, they are subject to fines and legal action.

While labor contractors are legally required to provide this information to client employers, labor contractors do not always supply the data. If a labor contractor refuses or fails to provide the necessary information, the client employer may be unable to file its required report or be able to file only a partially complete report. This can occur despite the client employer’s best efforts to obtain the necessary information. In recognition of this issue, in last year’s pay reporting frequently asked questions (FAQ) guidance, CRD stated that while the client employer would ordinarily be assessed for applicable penalties for failing to file a labor contractor employee report if the labor contractor fails to provide the necessary data to the client employer the penalties “may be apportioned to the labor contractor instead.”

The FAQs also state that CRD does not intend to pursue penalties where the client employer can show they made “a timely, good-faith effort” to obtain the required information, but the labor contractor failed to provide the information in a “timely fashion.” The guidance also notifies such client employers that they “should” email CRD to report such labor contractors providing names, addresses, and FEINs/SEINs of the labor contractor, as well as documentation of the effort to obtain the required information.

Importantly, the 2023 FAQs did not require client employers to report such labor contractors but encouraged client employers to do so. There are indications that client employers are increasingly open to reporting labor contractors that fail to provide necessary information, but client employers may be hesitant to do so because they are required to provide documentation of their efforts to obtain this data.

It is possible that this directive could be strengthened in the 2024 guidance to say that client employers must report labor contractors that fail to provide necessary data, but we will have to see. Regardless, it is likely that CRD will continue to pressure both labor contractors to supply full data and client employers to report labor contractors that fail to provide the necessary data for reporting.

Remote Worker Reporting Focus

For the first time during the 2023 reporting cycle, CRD required additional information concerning remote workers. The 2023 payroll employee and labor contractor employee upload templates added new columns requiring that information be added to each row showing the number of employees who did not work remotely, the number of remote employees located within California, and the number of remote employees located outside California. This breakdown allows CRD to see how many employees worked in person at the establishment as well as seeing the home state for all establishment remote employees.

The 2023 FAQs define remote workers as employees who “are entirely remote, teleworking, or home-based, and have no expectation to regularly report in person to a physical establishment to perform their work duties.” The FAQs make it clear that employees in “hybrid roles or (partial) teleworking arrangements expected to regularly appear in person to a physical location to perform their work duties” are not “considered remote workers for pay data reporting purposes.” These new requirements place a greater burden on employers to track their remote employees and review these details closely when completing the required California pay data reporting.

Enforcement Activity

The CRD states on its website: “Employers should be aware that CRD is actively pursuing non-filers.” On July 5, 2023, CRD announced that it had sued Cambrian Homecare, Inc., for failing to report employee pay data “[d]espite repeated warnings.”

While we wait for CRD to publish updated 2024 reporting guidance and templates, now may be a good time for employers to assess their preparations to file the 2024 payroll employee and labor contractor employee pay data reports.

Ogletree Deakins’ OFCCP Compliance, Government Contracting, and Reporting Practice Group will continue to monitor developments with respect to California pay data reporting and will provide updates on the firm’s California, OFCCP Compliance, Government Contracting, and Reporting, and Pay Equity blogs.

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