Key Takeaways

• California has passed a law requiring employers with 100 or more employees to report of pay data by race, ethnicity, and gender

• The law will permit state agencies to identify patterns of wage disparities and further allow for targeted enforcement of equal pay and discrimination laws

• The first annual report to the Department of Fair Employment and Housing is beginning on March 30, 2021

In an effort to address race and gender-based pay gaps, on September 30, 2020, California Governor Gavin Newsom signed Senate Bill 973 (SB 973) into law. Here is what employers need to know:

SB 973 requires that California employers with 100 or more employees submit an annual pay data report to the Department of Fair Employment and Housing. The report must outline the compensation and hours worked for all employees by defined job categories, gender, race, and ethnicity. Employers must submit this report beginning on March 31, 2021.

SB 973 follows similar efforts by the Equal Employment Opportunity Commission (EEOC), which under the Obama administration had attempted to collect pay data by race and gender—an effort that was later thwarted by the Trump administration. The effort to block collection of the data led to a lawsuit, wherein a federal court had reinstated the EEOC’s pay collection data for 2017 and 2018. Notably, the EEOC has since stated that it will not renew the requirement to collect this pay data for 2019 and beyond.

SB 973 permits state agencies to identify patterns of wage disparities and further allow for targeted enforcement of equal pay and discrimination laws. Notably, the law permits the department to receive, investigate, conciliate, mediate, and prosecute complaints alleging discriminatory pay practices.

We recommend that employers conduct internal audits of their pay practices, paying particular attention to gender and race pay gaps. Such audits will allow businesses to self-correct gaps and mitigate risk of discrimination and equal pay claims.

If you have any questions about this law or how it affects your business, please contact:

• Jacqueline K. Siegel
• Caroline J. Berdzik
• Peter J. Woo
• Kristin Klein Wheaton
• Or another member of our Employment and Labor team