California to Consider Requests to Defer Compliance With Labor Contractor Pay Data Reporting Obligations

On April 14, 2023, the California Civil Rights Department (CRD) announced that it will consider providing employers two-month extensions on the upcoming May 10, 2023, deadline to comply with the state’s new pay data reporting obligations regarding workers supplied by labor contractors.

Beginning on Tuesday, April 18, 2023, the CRD will accept “enforcement deferral requests” from employers regarding their obligation to file pay data reports on workers hired through labor contractors, or “Labor Contractor Employee Reports,” according to updates to the CRD’s frequently asked questions (FAQs) on the state’s pay data reporting obligations. If granted, the deadline for compliance would be deferred through July 10, 2023. Deferral requests must be submitted through the CRD’s pay data reporting online portal.

The potential extensions come as the expanded pay data reporting obligations in California’s new pay transparency law, particularly the requirement to file Labor Contractor Employee Reports, has caused confusion among both employers that hire labor contractors and labor contractors themselves.

Specifically, California Senate Bill (SB) 1162, which was enacted in September 2022, requires private employers with one hundred or more employees and/or one hundred or more workers supplied by contractors to file separate reports on pay, demographic, and other workforce data for both their employees and workers hired through contractors. The law requires labor contractors to “supply all necessary data” to client employers obligated to submit Labor Contractor Employee Reports.

According to the FAQs, the deadline to submit pay data reports to the CRD remains the second Wednesday of May each year for the prior reporting year (which falls on May 10 in 2023), after which the CRD maintains that it “may seek a court order requiring” compliance. However, the CRD stated that “[i]n light of the new requirement” on labor contractor reports, it will consider employers’ requests to defer “seeking an order of compliance with respect to a Labor Contractor Employee Report filed after the due date.” Such a deferral would be “up to and including Monday, July 10, 2023.”

Requests for enforcement deferrals “are not available” for pay data reports covering employees on an employer’s payroll or Payroll Employee Reports.

Key Takeaways

The CRD’s updates could provide California private employers a reprieve on pay data reporting obligations regarding workers hired through labor contractors added by SB 1162. The upcoming deadline marks the first time in which covered employers are required to file such reports. The law requires that labor contractors provide pay data to employers so that they can make these reports, but these new requirements have created uncertainty for both employers and labor contractors. The potential for extension may provide them more time to sort through these issues.

Ogletree Deakins will continue to monitor and report on developments with respect to California’s pay transparency law and will post updates on the firm’s California and Pay Equity blogs. Important information for employers is also available via the firm’s webinar and podcast programs.