While a bill signed by Gov. Gavin Newsom on the Sept. 30 deadline is designed to address pay disparity, it has raised concerns about using insufficient wage data that could possibly find fault where none exists.
Businesses with more than 100 employees already report to the Equal Opportunity Employment Commission (EEOC) gender, race, and other demographic data. SB 973 will require employers submitting those federal reports to begin submitting wage information to the California Department of Fair Employment and Housing (DFEH) every year.
“In California – we’ve seen over the last decade – they have really tried to tackle inequality issues, but this mechanism may not be the one that’s most effective at accomplishing that without creating undue consequences on good employers,” Peter Tateishi, CEO of the Associated General Contractors of California (AGC-CA) told the Northern California Record.
“It is adding a new layer of data above and beyond what the federal government is requiring at this time,” Tateishi added.
The EEOC announced in September 2019 it would stop collecting pay data. As stated in the Federal Register, “At this point in time, the unproven utility to its enforcement program of the pay data as defined in the 2016 Component 2 is far outweighed by the burden imposed on employers that must comply with the reporting obligation. Therefore, the EEOC is not seeking to renew Component 2.”
California is the first state in the nation to require the reporting of pay data by employee demographic.
According to the SB 973 Office of Senate Floor Analyses, California companies must provide a “’snapshot’ that counts all of the individuals in each job category employed during a single pay period of the employer’s choice between October 1 and December 31 of the ‘reporting year.’”
The AGC-CA and Civil Justice Association of California (CJAC) are part of a broad coalition that submitted opposing arguments to the legislature.
“CJAC does not condone pay disparities based on immutable characteristics. However, there are many valid, non-discriminatory, reasons for wage differences that businesses may consider – such as length of time at the company, flexible hours or differing job descriptions,” Kyla Christoffersen Powell, CJAC President and CEO, told the Record by email. “Therefore the reporting required by SB 973 could provide an incomplete picture and be misconstrued, giving rise to fishing expeditions and unwarranted litigation.”
SB 973, which was sponsored by the California Employment Lawyers Association, authorizes the DFEH to investigate and prosecute complaints, and it orders the DFEH to coordinate enforcement with the Division of Labor Standards Enforcement (DLSE), according to the Senate Analyses.
“SB 973 is a costly, bureaucratic reporting mandate that will create undue strain on employers and unnecessary civil liability exposure at a time when businesses can least afford it,” Powell added.