SB 973: California’s New Pay Data Reporting Law & What You Need to Know Before You File
Speaker Spotlight with Joanna Kim-Brunetti of TRUSAIC
SB 973 requires mandatory reporting of workforce demographic, pay, and hours worked data for certain employers with at least 100 employees.
Effective January 1, 2021, employers must submit annual reports of employees’ gender, race, ethnicity, pay, and hours worked data for the prior calendar year to the state Department of Fair Employment and Housing. This new California legislation mandates employers to file an annual Employer Information Report (EE0-1) under federal law also submit a pay data report by March 31, 2021, and annually thereafter.
PIHRA is thrilled to welcome back Joanna Kim-Brunetti! We’re looking forward to her presentation focusing on the best way to prepare for these new SB 973 requirements and how to be proactive in reducing risks stemming from the underlying workforce data at CELU21.
In 2019, Joanna spearheaded Trusaic’s EEO-1 Component 2 pay and hours worked reporting services. Joanna is also the former President of the Korean American Bar Association.
We interviewed Joanna to give you a preview of her 2021 California Employment Law update session titled, “California’s New Pay Data Reporting Law & What You Need to Know Before You File.“
PIHRA: What potential risks are associated with employers not effectively complying with SB 973 reporting?
Joanna Kim-Brunetti: Failure to effectively comply with SB 973 has three significant ramifications:
■ First, if an employer fails to submit the report, the Department of Fair Employment and Housing (DFEH) has statutory authority to obtain a list from the Employment Development Department (EDD) of all employers that have at least 100 employees. Thus, the DFEH can readily identify a noncompliant employer and obtain a court order to get the employer to comply and the employer will have to pay the costs of seeking that court order.
■ Second, even if an employer submits the report, but the report is inaccurate, the employer may be identifying larger pay gaps than in reality. DFEH in conjunction with Division of Labor Standards Enforcement (DLSE) may use information from the annual pay data reports as needed upon instituting an investigation or enforcement proceeding under California Equal Pay Act (Cal. Labor Code Section 1197.5). Additionally, a plaintiff, such as a former employee alleging pay discrimination, can seek a copy of the annual pay reports from their employer and/or potentially subpoena the reports from DFEH.
■ Third, even if an employer reports its SB 973 data accurately and timely, there remains a risk of liability because the SB 973 reporting only reveals the raw pay data. There is no accounting for legitimate business factors, such as job level, tenure, training, performance, and experience, which will likely reduce the apparent pay gaps identified in the raw data. To the extent that these legitimate factors of pay differences align with gender/race/ethnicity differences, the SB 973 report may create the impression of pay discrimination where there is none. Employers will want to run an analysis to determine whether and to what extent there are pay gaps and pay disparities (after accounting for legitimate factors).
PIHRA: Besides HR practitioners, who else within a company should be involved in creating a successful plan for SB 973 reporting?
Joanna Kim-Brunetti: An effective plan for SB 973 reporting includes a pay equity audit. This may require buy in at the executive level and/or in house counsel oversight to maintain privilege over the audit. Additionally, the company may need to engage an external consultant to advise on what data to capture, what to review and analyze and who has the knowledge and know-how to conduct a pay equity audit correctly.
PIHRA: What is one of the biggest compliance challenges employers will face with SB 973?
Joanna Kim-Brunetti: Among the biggest challenges include the need to utilize complete and clean data, i.e., data without human errors (such as errors in data entry), incomplete gender, race/ethnicity information, job category information and not consolidated with pay information.
Another key challenge is understanding that submitting the SB 973 report means that the employer has submitted its raw data without accounting for legitimate business factors, such as job level, tenure, training, performance, and experience, which will likely reduce the apparent pay gaps identified in the raw data. To the extent that these legitimate factors of pay differences align with gender/race/ethnicity differences, the SB 973 report may create the impression of pay discrimination where there is none. Employers will want to conduct a pay equity audit to determine whether and to what extent there are pay gaps and pay disparities (after accounting for legitimate factors) so that any downstream issues that arise from the SB 973 report, they know what the issue is, and will have a remediation plan to address.
PIHRA: Why are you looking forward to speaking at PIHRA’s 2021 California Employment Law Updates?
Joanna Kim-Brunetti: I’m looking forward to speaking at PIHRA’s 2021 California Employment Law Update so that I can help inform PIHRA community members about this important new law and I can answer their most pressing questions. My goals are to ensure that they walk away with a clear understanding of the data that needs to be reported, what that data may reveal, and how that data might be used against employers. Employers will be able to avoid the potential for agency enforcement that may arise post submission of their California pay data to the DFEH and to implement a plan to minimize the risk of future pay discrimination claims that may be implied from that pay data.
A message from 2021 California Employment Law Update presenter Joanna Kim-Brunetti of TRUSAIC…..
Confidently navigate employment law in 2021
Since we’re virtual this year, register now and experience the 2021 California Employment Law Update by PIHRA from anywhere you want.
About Joanna Kim-Brunetti Presenter at the 2021 California Employment Law Update by PIHRA
Joanna, a former partner with Akin Gump Strauss Hauer & Feld LLP, has over 20 years of experience advising clients on a wide range of employment, tax, intellectual property, and other related business issues.
Joanna holds a B.Sc. degree in Chemical Engineering from the University of California, Berkeley, and J.D. from Loyola Law School (with honors). She was President of the Korean American Bar Association; Rising Star, Super Lawyers; Co-Chair of various subcommittees under the American Bar Association and the Los Angeles County Bar Association.