This year, the California Legislature passed and the Governor approved the Contraceptive Equity Act of 2022 (Senate Bill 523 or SB 523), a piece of legislation intended to increase the ability of Californians to exercise full control over their reproductive decisions and to expand coverage and decrease access barriers to reproductive health services.

Among other things, Senate Bill 523 makes changes to the Fair Employment and Housing Act (FEHA) that take effect on January 1, 2023. Generally, the FEHA’s protections apply to all public employers.

SB 523 expands the FEHA to include “reproductive health decision-making” in the list of classifications protected by the FEHA.  Reproductive health decision-making means, without limitation, “a decision to use or access a particular drug, device, product, or medical service for reproductive health.”  As a result, beginning January 1, 2023, the FEHA will prohibit employment-related discrimination, harassment, and retaliation based on employees’ reproductive health decision-making.  SB 523 also makes it unlawful for an employer to require, as a condition of employment, continued employment, or a benefit of employment, the disclosure of information relating to an applicant’s or employee’s reproductive health decision-making.

SB 523 makes clear that the protected classification “sex” may also include reproductive health decision-making and the two classifications may overlap.  “Sex” also includes things such as (1) pregnancy or medical conditions related to pregnancy; (2) childbirth or medical conditions related to childbirth; (3) breastfeeding or medical conditions related to breastfeeding; and (4) gender, gender identity, and gender expression.

To prepare for these changes to the FEHA that take effect on January 1, 2023, we recommend that employers revise their discrimination, harassment, and retaliation policies and other relevant policies to incorporate the new protections for reproductive health decision-making, including in the list of protected classifications these policies set forth.  Employers should also advise supervisors and managers of the changes in the law, and keep in mind that these changes should be incorporated into the mandatory non-supervisory and supervisory harassment training.

The Contraceptive Equity Act of 2022 also makes various changes to the law governing health care service plans and health insurance policies intended to improve equitable access to preventive contraceptive care, which apply to health care service plan contracts and health insurance policies issued, amended, renewed, or delivered on and after January 1, 2024.

‘Tis the season to deck the halls and celebrate all things holiday!  Office holiday parties can be great fun, but they are fraught with pitfalls.  Planning an office holiday party is a daunting task!  However, with a little advance planning you can ensure a safe and happy holiday season for all of your employees!

  1. Make Sure Everyone is on the Nice List

It is important to make sure that all of your employees feel welcomed at your company holiday party.  It is important to select a theme and décor that are inclusive to all of your employees.  Opt for snowflakes over Santa Claus.  Rather than focus on a particular holiday, a year end party may be a good time to celebrate your employees and their accomplishments.  Perhaps a video montage of the past year’s activities or an award ceremony recognizing your best and brightest?  Also, when planning a holiday party, make sure that the date you select does not interfere with any religious holidays that your employees may celebrate.  Celebrating in January can avoid some of these scheduling conflicts and also be very cost-effective!

Selecting an accessible venue is also key to a safe and inclusive event.  Consider your employees’ unique needs when selecting the party location to make sure everyone can attend.  Is the venue wheelchair accessible?  Will the lighting aggravate an employee’s medical condition?  If you plan team building events or party games, be sure that the activities are accessible to all.  For example, a limbo contest may not be the best option if you have any employees who are in a wheelchair.

Finally, make sure that you express that attending the party is voluntary.  Employees may have a myriad of reasons for not attending, so make sure everyone knows that attending the holiday party is not required and there will no negative repercussion if employees opt to sit this one out.

  1. Avoid Eggnog Overload

Everyone has an embarrassing story to tell about a co-worker who had a few too many glasses of egg nog at the company holiday party.  As an employer, you can take steps to ensure that all employees have fun and avoid doing the Monday morning walk of shame past the cubicles.

You can serve alcohol even if you have a drug-free and alcohol-free workplace policy, but you should consider options for ensuring the safety of all employees.  First and foremost, you want to make sure that everyone gets home safely.  You may want to offer shuttles or ride services to all employees at the party.  Alternatively, you may be able to take some steps to limit alcoholic beverages by using drink tickets or limiting the number of hours of open bar.  It is also a good idea to serve food and water with the alcoholic beverages.  One option is to have a post-meal “midnight snack” served late in the party such as sliders or sandwiches.  Second, ensure that the bartenders will cut people off after a certain number of drinks.  If you hire bartenders for the event, be sure to speak with them in advance and empower them to stop serving anyone who has had a few too many drinks.  Third, consider planning some activities such as team-building to shift the focus away from drinking.  Perhaps a trivia game or matching baby pictures to employees.  Fourth, consider holding the party at your worksite during work hours – which tends to discourage drinking.  Alternatively, start the party immediately following the work day to eliminate any pre-party imbibing.

  1. Forego the Mistletoe

While you do want your employees to let loose at the party, you also want to make sure that everyone feels respected and safe.  In advance of the party, you should remind employees of your policies on sexual harassment and dress code.  You can also invite employees’ significant others to the party which may encourage employees to be on their best behavior.  Further, any games or team activities that you plan should not involve bodily contact or disrobing.  Avoid twister or strip poker!

  1. Gifting Guidelines

Everyone loves presents!  However, if you plan to do a holiday gift exchange, remind employees that the gifts should be work appropriate.  One option is to consider a gift card exchange or a silly sock exchange to limit the chances of a NSFW gift making an appearance at your holiday party.

  1. Create a Grinch Squad

Despite all of your planning, there is still a chance that something could go wrong at the party.  It might make sense to have a designated team who agrees to remain sober and step in if the event gets out of hand.  This does not need to be comprised exclusively employees from the Human Resources department; the team should be made up of a variety of different employees from different departments.

  1. Have fun!

Last but not least, be sure to have fun!  You and your team work hard all year and deserve to celebrate!

Happy Holidays and Happy New Year from your friends at LCW!

The height of the COVID-19 pandemic may be behind us, but the many shifts it prompted in workplace dynamics could be here to stay. One such trend is in the spotlight due to a recent New York Times investigative report: an increasing number of employers are utilizing digital monitoring software that can provide a minute-by-minute account of employees’ activity and quantify their productivity, whether they’re working remotely or in the office. The technological capabilities of this software range from basic activity tracking to taking photos of employees’ screens and faces.

Digital surveillance of employees raises a number of legal concerns, therefore agencies should consult with legal counsel before implementing the practice. This blog post lists some of the salient risks associated with monitoring technology and identifies best practices for risk reduction and effective management.

Possible Bargaining Obligation

While the use of employee monitoring technology is concentrated in the private sector, a number of public agencies in California and beyond are already relying on it to track employee productivity. Unionized public agencies in California must be mindful that the introduction of employee monitoring technology to the workplace would likely trigger an obligation to meet and confer with recognized employee organizations.

California Government Code section 3505 requires employers to “meet and confer in good faith regarding wages, hours, and other terms and conditions of employment” with recognized employee organizations. Electronic surveillance of employee activity can affect the terms and conditions of employment in more than one way: First, the information gathered by monitoring software—such as an employee productivity score or evidence that an employee is engaging in inappropriate or illegal activity on the job—often factors into employee evaluations or disciplinary decisions. Moreover, as discussed further below, close monitoring of employee activity also touches on wage and hour issues, including overtime and measurement of hours worked.

Electronic monitoring software is likely analogous to agencies’ installation of surveillance cameras in the workplace or monitoring of employee internet usage, each of which PERB has held to be a mandatory subject of bargaining. In Rio Hondo Community College District (2013) PERB Decision No. 2313E, PERB reasoned that both practices create a new category of evidence that an employer may rely on to substantiate employee performance evaluations or impose discipline, therefore the agencies in question violated labor laws by failing to negotiate the effects of the practices on the terms and conditions of employment with their employee organizations. Agencies considering implementing electronic surveillance software should therefore provide notice to and engage any recognized employee organizations early on in the process to avoid an adverse effect on the employer-employee relationship.

Wage and Hour Considerations

Depending on the functions performed by the software, employee monitoring technology can become a wage and hour law minefield in the absence of a well-designed policy.

Particularly problematic are the screenshot functions offered by certain employee monitoring tools. This generally works as follows: the software takes a screenshot of an employee’s computer desktop at regular intervals, and if the screenshot captures a moment of inactivity, the software excludes the entire interval from the employee’s hours worked. At least one employer has already settled a Fair Labor Standards Act (FLSA) class action lawsuit alleging this practice resulted in a failure to pay employees for all hours worked and to capture overtime hours—particularly as to offline work not recorded by the software. The Department of Labor also prohibits employers from rounding time in determining an employee’s hours worked in a manner that will “result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.” Employee monitoring software that systematically rounds down—say, rounds 9 minutes of work down to 0 because a screenshot captured inactivity during 1 minute of a 10 minute interval—risks running afoul of DOL directives.

Also, all employee surveillance software risks imparting constructive knowledge to the employer in the context of overtime work. The FLSA requires employers to pay nonexempt employees overtime wages for all work that the employer knew or should have known the employee was performing outside of normal work hours. If electronic monitoring software is logging employees’ every activity, it becomes much more challenging for an employer to argue that it lacked knowledge of overtime hours worked. On a similar note, agencies that utilize surveillance software to track independent contractors risk a misclassification lawsuit, as the intricate monitoring of a worker’s activity may weigh the scales in favor of classification of those workers as employees.

Finally, agencies using monitoring software to evaluate employees’ productivity must be careful not to penalize employees who engage in non-work related activity during meal or rest periods. Surveillance software that runs constantly in the background cannot be utilized to blur the line between work and personal time.

Employee Privacy Concerns

Monitoring employees’ activity on electronic devices raises obvious privacy concerns—a keystroke logger can log an employee’s passwords, a desktop screenshot may reveal a text from a family member, or a webcam photo of an employee’s workspace can capture….well, you can use your imagination.

The issue of employee data privacy has inspired a bout of legislative activity in California that has yet to become relevant to public agencies—the California Consumer Protection Act, a high watermark in U.S. data privacy law that requires businesses to disclose what information they’re collecting on consumers, how they collect it, and how they will use it, contains an exemption for employers that expires in 2023; in any case, the law does not apply to public agencies. Meanwhile, a bill that would strictly regulate the use of employee monitoring technology by California employers including state and local agencies—AB 1651, also known as the Workplace Technology Accountability Act—is currently stuck in committee.

Despite the lack of federal or California law directly addressing electronic surveillance of employees, several laws create a need for caution and inform best practices. At the federal level, the Electronic Communications Privacy Act (ECPA) prohibits the unauthorized interception of electronic communication or seizure of communications stored on an electronic platform. The ECPA contains two exceptions: (1) employers may intercept and access electronic communications that occur in the ordinary course of business, and (2) employees may consent to monitoring.

At the state level, the California Constitution expressly creates a right to privacy, which attaches only where a court determines an employee had a reasonable expectation of privacy in the electronic data in question. Courts generally find no reasonable expectation of privacy in employer-provided devices or networks when the employer’s policy advises employees to that effect, and where the employee executes an appropriate acknowledgement. California also has its own ECPA, codified under Penal Code section 1546, et. seq., that protects the communications of an “authorized possessor” of an electronic device. While it is unlikely that a court would interpret these laws to allow an employee to exert the rights of an “authorized possessor” and decline a search by the government entity that actually owns and provided the electronic device, this ambiguity in the law underscores the importance of a policy that explicitly notifies employees that electronic devices are subject to monitoring. Finally, neither the California Consumer Protection Against Computer Spyware Act nor the California Data Access and Fraud Act, which prohibit unauthorized spyware installation and data hacking, respectively, contain explicit exemptions for employers vis-a-vis employees’ electronic devices, making obtaining employees’ consent to monitoring all the more prudent.

Summing Up Best Practices

Employers preparing to implement employee monitoring technology should abide by two key principles: transparency and consent. Not only does communicating with employee associations satisfy meet-and-confer requirements, it also increases the odds of employee buy-in—a recent Harris poll found that 77% of employed Americans would be less concerned with their employer monitoring their digital activity on personal or work-issued devices they use to conduct work if the employer is transparent about doing so. Obtaining employees’ written consent to a monitoring policy likewise furthers the goal of transparency while also mitigating the risks created by indeterminate data privacy laws. Open lines of communication can help realize monitoring software’s potential to maximize employee efficiency to the benefit of employers and employees alike.

On October 31, 2022, the U.S. Supreme Court heard oral arguments in two cases: Students for Fair Admissions v. University of North Carolina and Students for Fair Admissions v. President and Fellows of Harvard. The Court’s resulting decision now stands to determine the fate of race-conscious admissions in higher education.

Brief Factual Background

Holistic admissions processes are those that attempt to look at the whole applicant, evaluating their unique experiences and characteristics, rather than reducing entry criteria to a single test score or GPA. Both the University of North Carolina (UNC) and Harvard have implemented admissions policies that are “holistic” in nature. In addition to academic excellence, both universities strive for a demographically diverse student body. In an effort to cultivate that diversity, admissions policies for both institutions admittedly allow for consideration of race as one of many factors when choosing successful applicants. The mere use of race as a factor under these policies, goes to the heart of the issue.

Both cases are before the Court at the behest of Students for Fair Admissions (SFFA), a non-profit  advocacy group that represents the interests of Asian American students alleging discrimination based on race-conscious admissions policies at the UNC and Harvard. SFFA alleges that both universities have violated Title VI of the Civil Rights Act of 1964 by using race as a determining factor in admissions and for failing to use race neutral alternatives. For similar reasons, the group further alleges that as a public university, UNC is in violation of equal protection under the 14th Amendment.

Legal Background and Oral Argument Highlights

In 1954, Brown v. Board of Education of Topeka (1954) 347 U.S. 483, changed the trajectory of U.S. history by prohibiting segregation in public schools.

Parties on both sides of oral argument invoked Brown, emphasizing starkly opposite views on its legacy. On one hand, opponents of race conscious admissions emphasized Brown as a case that firmly rejected the view that racial classifications have any role to play in determining educational opportunities. On the other, proponents of diversity asserted, at oral argument that Brown prophesied education as an “engine of our democracy, a place where students could prepare for the rights and obligations of citizenship in a diverse and inclusive setting.”

Discussions also arose surrounding “strict scrutiny,” the most stringent standard of judicial review. The Court has consistently found this standard to apply when a government practice or statute contains “suspect classifications,” such as race. Strict scrutiny requires the government to show that its practice is narrowly tailored to serve a compelling interest. Despite strict scrutiny’s exacting nature, Justice Thomas questioned deference to universities in the area of diversity as a compelling interest.

In response, the Court took up the meaning and importance of diversity. The parties argued whether and to what extent diversity could be accomplished through means other than race-consciousness. Some Justices broached the topic with apparent skepticism.

In deciding the Harvard and UNC cases, the Supreme Court will decide whether to overturn its decision in Regents of University of California v. Bakke (1978) 438 U.S. 265.  There, the Court upheld educational diversity as a permissible justification for affirmative action, apart from racial quotas. In Bakke, Justice Powell clarified that although Equal Protection is frustrated when race is the determining factor in an admissions decision, “diversity that furthers a compelling state interest encompasses a far broader array of qualifications and characteristics of which racial or ethnic origin is but a single though important element.”(Ibid. at p. 315.) Of course, this opinion now hangs in the balance along with several others that have accepted race as a factor in the admissions process.

It should come as no surprise then, that SFFA has called upon the Court to overrule cases such as Grutter v. Bollinger (2003) 539 U.S. 306, a landmark decision holding that University of Michigan’s Law School could consider an applicant’s race as one of many factors in its admissions process to create a diverse student body. The decision distinguished admissions policies designating “underrepresented minority” status as a “plus” factor from purely race-based admissions, so long as the decision to consider race furthered the school’s “compelling interest” in a diverse student body and was “narrowly tailored,” or in other words, just one factor in the process. Currently, Harvard and UNC both acknowledge they rely on a Grutter-like admissions practices.

SFFA Counsel, Patrick Strawbridge suggested that ‘holistic’ admissions processes and the consideration of personal admissions criteria other than race would remain legitimate in a post-Grutter world. In response, Justice Jackson voiced concerns that accounting for such characteristics to the exclusion of race might “have the potential of causing more of an equal protection problem than it’s actually solving.”

Concerns were also aired over when educational diversity would be achieved. The Grutter opinion claimed that race-conscious policies would be limited in time. (Grutter v. Bollinger, supra, 539 U.S. 306 at p. 310.) Justice Sandra Day O’Connor there opined that, “25 years from now, the use of racial preferences will no longer be necessary to further the interest approved today.” (Ibid.) As a result, Justice Kavanaugh asked North Carolina’s Solicitor General, Ryan Park, whether race-conscious admissions used in an effort to promote diversity had some inevitable end or whether they might be permissible indefinitely. Park replied that “every institution in every state will differ” when it comes to the time necessary to achieve diversity.

Impact on California

Since 1996, California has prohibited race-based admissions in public universities through Proposition 209. In fact, California’s ban was referenced in oral argument on multiple occasions. Justice Kavanaugh noted that despite the ban, California has “significant numbers of minority students on campus.” Others contended that California public universities still struggle with minority enrollment and that the percentage of minority enrollment reduced significantly after Prop 209 passed. The University of California system itself briefed the Court on the matter, noting that race-neutral alternatives have been extremely costly and ineffective when it comes to achieving diversity on campus, especially with regard to recruitment of Black and Native American Students.

The fact that California has banned such admissions might signal to some that a decision against race-conscious admissions will not have as great of an impact in our state. However, California’s numerous private universities and colleges stand to be affected. Further, the impact may have a ripple effect into other areas of the law.

At present, a decision is set to issue by June.

LCW will continue to monitor the case and will provide updates as they become available.

Does anyone want to hear about the potential for a COVID-19 winter surge? Probably not. Unfortunately, experts warn that a surge is possible. The Centers for Disease Control and Prevention (“CDC”) warns about new immunity-evading Omicron subvariants, BQ.1 and BQ.1.1. CDC models show that these new variants, which just a few weeks ago accounted for no new COVID-19 cases, now make up a significant percentage of all new infections.

However, we have guided employers through several COVID-19 surges and know effective tips to keep your workforce healthy and safe.

  1. Prioritize Vaccines and Boosters

One of the best tools to combat COVID-19 in the workplace is to encourage employees to stay up-to-date on their COVID-19 vaccinations and booster shots. All adults who have received their primary round of COVID-19 vaccine shots are now eligible for booster shots.

Current Vaccines and booster shots have been developed to better protect against evolving COVID-19 variants. Previous booster shots were “monovalent,” meaning they just included one component of the original COVID-19 strain. However, current boosters are “bivalent,” and include components of the original COVID-19 strain as well as components of the Omicron variant. The California Department of Public Health (“CDPH”) provides information about the different approved booster shots. The CDPH also provides a helpful chart about when to receive primary and booster shots here.

Employers should consider encouraging their employees to receive the newly developed bivalent COVID-19 booster shot, which specifically targets the Omicron variant. The percentage of the population who has received this updated booster shot is extremely low. For example, only 8% of eligible LA County residents have received the updated bivalent booster dose.

One of the best ways to encourage employees to become fully vaccinated and boosted is to provide them with information about the primary vaccines and booster shots, and how they can schedule an appointment. Employers may also remind employees that they can use COVID-19 Supplemental Paid Sick Leave (“SPSL”), discussed below, to attend a vaccine appointment. Even if employees exhaust their SPSL allotments and other forms of paid leave, employers may consider providing their employees with paid administrative leave to attend a vaccine appointment.

  1. Inform Employees About Sick Leave Options

Supplemental Paid Sick Leave

Employers should encourage employees who are sick or symptomatic to stay at home to reduce the risk of employees transmitting the virus in the workplace. One of the most effective ways to do this is to provide employees with information and resources about the available paid leaves should they develop symptoms associated with COVID-19 or contract COVID-19.

In September 2022, Governor Newsom signed into law a bill that extended the 2022 version of COVID-19 Supplemental Paid Sick Leave (“SPSL”) to December 31, 2022. As a result, all employers with 26 or more employees must continue to provide employees up to 80 hours of SPSL for employees who cannot work or telework because of COVID-19.

You can read more about SPSL here, as well as the September 2022 updates to SPSL here.

Paid Sick Time & Paid Administrative Leave

If employees exhaust their SPSL allotment, they are still entitled to access and utilize accrued paid sick leave. Employers should remind employees of the amount of paid sick leave that they have available and encourage employees to use such paid sick leave if they are sick or presenting symptoms associated with COVID-19, rather than come to work.

For employees who have exhausted all of their SPSL and all of their paid sick leave, employers have a couple options that they may want to consider: (1) provision of “negative accrual” of paid sick leave; and (2) provision of paid administrative leave.

Employers may consider allowing employees to accrue negative sick leave balances. In this situation, employees may take sick leave, and then work to repay the leave in subsequent pay periods. Alternatively, employers may consider offering paid administrative leave to employees who have exhausted all SPSL and paid sick time to ensure that sick employees do not come to the workplace.

Providing employees information about the leave to which they are entitled and considering options for the provision of discretionary paid leave will help prevent outbreaks in the workplace.

  1. Remember Preventative Measures

At this point, we all know tips to keep the potential COVID-19 surge at bay, and how to address surge concerns once COVID-19 numbers begin to rise. Here are reminders about effective preventative measures employers may consider:

  • Wear a well-fitting mask with good filtration, especially while indoors and while community rates are high.
  • When possible, hold meetings and calls in large areas with ample ventilation, or remotely by teleconferencing software like Zoom or Teams. If such meetings must be held in person, encourage employees to wear their masks.
  • Are the workspaces in your workplace six feet apart? Employers should consider workspace layout to ensure that employees working in the same area and sharing the same air space are not in prolonged close proximity to one another.
  • Is there proper ventilation? Employers should consider engineering changes to ensure that clean filtered air circulates in workspaces.
  • Consider staggering start and end times so employees are not in the same area at once.
  • Consider a temporary switch back to remote work schedules for employees who can work remotely. (Ensure that you have a remote work agreement in place.)
  • Encourage employees to test regularly. Consider having tests available for employees on-site.
  • Above all, encourage your workforce to stay home if they feel sick.
  1. Know About New COVID-19 Notice Requirements

Employers should be also aware that on January 1, 2023, statutory changes to the COVID-19 workplace notice requirements take effect. LCW issued a special bulletin with more information about these changes, which can be viewed here.

If there is another COVID-19 surge this winter, trusted legal counsel are available to assist employers with any COVID-19 related questions and information about how to prepare for a potential outbreak.

On September 27, 2022, California Governor Newson signed Senate Bill 1162, which is California’s new pay transparency and pay data disclosure law.

 

This new law will require nearly 200,000 California companies with 15 or more employees to include pay ranges in all job postings and advertisements, effective January 1, 2023. Also, private employers with 100 or more employees must submit pay data reports to the California Civil Rights Department, formerly known as the Department of Fair Employment and Housing, by May 10, 2023, and annually thereafter on the second Wednesday in May.

The intent of the law is to promote pay equity with an eye toward closing the wage gap between women and men—particularly minority women. Failure to comply with this new law could result in various civil penalties.

 

Pay Scale Disclosures for Applicants

Although most public employers routinely disclose pay scales in job postings, the new law requires both private and public employers with 15 or more employees to post the pay scale in their job postings. For purposes of this law, “employee” is defined as an individual on an employer’s payroll and includes part-time individuals. Also, third parties posting on behalf of these employers will need to post the pay range.  Pay scale is defined as the salary or hourly wage range that the employer reasonably expects to pay for the position. Although the benefits and other forms of compensation are not included in the definition of “pay scale,” employers may include that information in order to attract applicants.

 

A notable way Senate Bill 1162 changes the law is that, before its enactment, applicants were permitted to request the pay scale for a position after the initial interview. Now, upon reasonable request, any applicant is entitled to this information before completing the initial interview.

 

Pay Scale Disclosures for Current Employees

All covered employers, regardless of the number of employees, upon request, are required to provide an employee with the pay scale for their current position. Therefore, starting January 1, 2023, public and private employers should expect a surge of requests from current employees.

 

Record Retention

Employers of all sizes will need to keep job title and wage rate records for each employee throughout their employment and for three years after termination. It is imperative that employers abide by this new record retention policy since, as the statute describes, failure to do so creates a rebuttable presumption in favor of any employee’s claim that the employer violated the Act. Also, these records must be made available to the Labor Commissioner for inspection to determine if there is a pattern of wage discrepancy.

 

New Civil Penalties

For violations of the new pay scale law, employees may file a complaint with the Labor Commissioner, which the Labor Commissioner is obligated to investigate promptly. Additionally, the new law creates a private right of action, which could lead to penalties of up to $10,000 per violation. However, the first penalty will not be assessed if the employer has demonstrated they have cured the job posting violation by updating it to include the pay scale.

 

Pay Data Reports

Before this law was enacted, employers with 100 or more employees were required to submit pay data reports if they were required to file an annual Federal EEO-1 Employer Information Report. Employers could also simply file the EEO-1 in lieu of filing a pay data report. Now, the new law requires pay data reporting for any employer with 100 or more employees, regardless of whether the employer must submit the Federal EEO-1 report. The new law also requires private employers with 100 or more employees hired through labor contractors in the prior calendar year to submit a separate pay data report covering labor contractors. The annual reports must disclose each employee and labor contractor’s median and mean hourly rate according to race, ethnicity, and gender in each job category. Also, employers with multiple establishments must submit a separate pay data report for each establishment.

 

Compliance and New Civil Penalties

To ensure that companies comply with the report filing requirements, the Civil Rights Department is authorized to request the Employment Development Department to provide it with the names and addresses of all businesses with 100 or more employees. This list will also be a public record. Failure to submit the annual reports can lead to fines/civil penalties of up to $100 per employee for initial violations and up to $200 per employee for subsequent violations, in addition to the employer potentially being responsible for the Department’s costs associated with obtaining a court order to ensure compliance. So, for example, an employer with 100 employees could face a $10,000 fine for an initial violation, plus costs.

 

What could this mean for employers?

Since the pandemic, wages have become competitive. Thus, one effect this law will have is that employers may feel pressured to offer higher wages because the compensation packages of their competitors will be more attractive. On the other hand, employers may benefit from these pay transparency requirements since it will likely streamline hiring, compensation, and the talent development process, and make businesses run more efficiently.

 

Another effect this law may have is current employees may begin more extensively discussing compensation, which is protected speech under labor relations laws. The results of sharing may be that employees discover who is getting paid more or less and why. In any case, employers should be prepared to explain any pay discrepancies and be mindful of perceived pay inequality when posting pay ranges on job advertisements.

 

Finally, employers should begin preparing to comply with these broad changes and consider hiring a third party to assist if they do not have a reasonable pay structure in place.