This year, employers in California have updated pay data reports to submit to the state’s Civil Rights Department (CRD). Senate Bill (SB) 1162, passed in 2022, updated previous employee pay data reporting obligations and created an entirely new obligation to pay data reporting related to “employees hired through labor contractors.” This year, these pay data reports are due by May 10th.
In January, the state issued Frequently Asked Questions to assist employers to navigate these new requirements—in particular regarding the requirement to submit pay data reports on “labor contractor employees.”
California’s initial guidance was that “labor contractor employees” included only workers
“on a labor contractor’s payroll,”
“for whom labor contractor is required to withhold federal social security taxes from that individual’s wages,” and
“who performs labor for a client employer within the client employer’s usual course of business.”
Because the phrase “who performs labor of a client employer within the client employer’s usual course of business” was not defined, many employers and commentators reasonably interpreted the reporting to be limited to workers who are involved with the actual functioning or immediate support of the employer’s business.
This interpretation includes, for example, administrative augmentation, information technology support, call center workers, and contract labor performing the same work as the company’s employees. But it would exclude ancillary...
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