In an ongoing effort to combat employment discrimination and promote pay transparency, the state of California passed SB 973 in 2020. 

This law requires California private companies with 100 or more employees to annually report pay and hours-worked information by establishment, job category, sex, race, and ethnicity to the California Department of Fair Employment and Housing (DFEH).

DFEH recently released its analysis of the state’s pay data reporting results from the 2020 tax year. Here are some key takeaways employers should note.

Women, Latinos, and other groups overrepresented among low-wage workers

California pay data reporting results for the 2020 tax year shows both gender- and race-based wage gaps among 6.3 million workers. It’s important to note DFEH’s findings are not representative of the entire California workforce, which stands around 17.8 million. Public employers, independent contractors, smaller employers, and certain types of workers are exempt from reporting.

According to the DFEH analysis, women are overrepresented among low-wage workers and administrative support, sales, and service workers. Women constitute 55% of workers making around $30,000 or less a year.

At the same time, men are overrepresented among high-wage workers and executives, managers, and craft workers. Men represent 64% of people earning an annual salary of more than $128,000.

The report also shows that Hispanic/Latino, Black/African American, and certain other minority racial/ethnic groups are overrepresented among low-wage workers and/or in certain job categories. Hispanic/Latino people alone represent 50% of workers making around 30,000 or less each year.

“Today’s report reinforces the need for employers to review their compensation and other employment practices to correct pay disparities and ensure equal opportunity in their workplaces,” said DFEH Director Kevin Kish in a press release. “DFEH will continue to vigorously enforce California’s equal pay and antidiscrimination laws.”

DFEH’s findings align with an internal analysis Trusaic conducted across the entire California workforce, which reported the wage gap cost women $46 billion and people of color $61 billion in 2020. 

A move toward more transparent pay practices

DFEH’s analysis points to a clear need to address pay disparities, reinforcing the Golden State’s recent efforts to ramp up existing transparency efforts with the introduction of SB 1162

If signed into law, SB 1162 would amend SB 973 to further help close unfair gaps by requiring employers to provide wage range disclosures in all job listings. It would also make internal promotions available to all employees and make pay data reported to the state public over time.

The draft SB 1162 is moving along in the legislative process – it passed through the Senate Committee last month. It will undergo further review before it goes to California governor Gavin Newsom for signature by August 31.

With a growing focus on pay transparency and employers’ reporting obligations potentially expanding, organizations should respond proactively. Performing a pay equity audit is the first step to reviewing your organization’s compensation practices and getting a handle on pay data reporting.

Trusaic’s all-in-one PayParity diversity, equity, and inclusion (DEI) solution offers monitoring and auditing tools to help your organization analyze its data, meet pay equity goals, and position itself as an attractive and forward-thinking employer.

To learn more about California’s pay data reporting law, download our white paper below:

Download: California SB 973 White Paper