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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 you 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. California’s DFEH website will be updated closer to the report’s due date with information on how to submit the collected data (dfeh.ca.gov).
- SB 973 follows similar efforts by the Equal Employment Opportunity Commission (EEOC). Efforts to block the 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.
It is recommended 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 the risk of discrimination and equal pay claims.
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