Blogs November 2020

On September 30, 2020, California Governor Gavin Newsom signed SB 973, also known as the California Gender, Race Pay-Gap Law. This law, going into effect January 1, 2021, creates new pay data reporting obligations, requiring employers to detail pay data for specified employee job categories, broken down by race, gender and ethnicity.

Who is Subject?

Private California employers with 100 or more employees that are required to file an annual, federal Employer Information Report (EEO-1) are subject to this new law. Employers with fewer than 100 employees and governmental employers are not subject to this law.

Deadline

Covered employers must submit pay data reporting to the California Department of Fair Employment and Housing (DFEH), by March 31, 2021. Thereafter, employers must submit pay data reporting annually to reflect pay data from the prior calendar year.

Broad Job Categories Included

The following job categories are included in the pay data reporting requirements:

• Executive or senior level officials and managers
• First or mid-level officials and managers
• Professionals
• Technicians
• Sales workers
• Administrative support workers
• Craft workers
• Operatives
• Laborers and helpers
• Service workers
  
  

Reporting Requirements

The pay data report must include the following elements:

• Number of employees by race, ethnicity and sex whose annual earnings fall within each of the pay bands that are used in the U.S. Bureau of Labor Statistics Occupational Employment Statistics survey
• Total number of hours worked by each employee counted in each pay band during the reporting year
• Employer’s North American Industry Classification System (NAICS) code

Data must be provided in a format that allows the DFEH to search and sort the information using readily available software.

Employers with multiple establishments must submit a report for each establishment and a consolidated report that includes all employees.

In parallel to the now-being-challenged federal individual mandate to carry health insurance, California has passed a Health Care Mandate. The tax penalty that California residents face for not carrying health insurance is $695 per adult and $347.50 per child or 2.5% of gross income above the filing threshold, whichever is higher.

California Minimum Essential Coverage Information Reporting (MEC IR) essentially means that copies of the federal 1095-B/C and 1094-B/C forms must be submitted to the State of California (as well as to the IRS) so that the state is able to confirm health coverage for individuals.

What are the Filing Requirements?

Insurance providers are required to report health coverage information to the California Franchise Tax Board (FTB) annually. Employers are similarly required to report health insurance information, but only if their insurance providers do not report to FTB. The deadline for both insurance carrier and employer filings is March 31^st.

What is the Penalty?

The penalty for not reporting is $50 per individual who was provided health coverage.

When are Carriers Responsible?

Carriers are responsible for health coverage information reporting when a plan is fully insured. This means if coverage is fully insured, there is no direct action to take for employers relative to reporting for the California Mandate.

Self-Funded Employers Must File

Employers are responsible for health coverage information reporting when a plan is self-funded. This means for self-funded plans (and for level-funded plans) employers are required to take steps to complete the required reporting.

Timeline

• FTB starts accepting MEC IR registration/enrollment: October 5, 2020
• FTB starts accepting test files: October 5, 2020
• FTB starts accepting production files: January 4, 2021
• Deadline for MEC IR submission: March 31, 2021
  
  

How to File Electronically

Employers who need to file can submit information either electronically or by paper. The FTB has created an easy-to-follow Getting Started wizard. There are three steps to the process:

1. Register Online: A Responsible Official completes the registration on behalf of the organization.
2. Enroll in the MEC IR Program: After logging into the MEC FX Portal, submit a MEC IR enrollment form online.
3. Submit MEC Information: This step includes a test cycle and the ability to manage enrollment, transmit data, and get acknowledgements.
   
   

How to File by Mail

You can send MEC IRs directly to the FTB by mail. The FTB has provided resources and instructions for direct mail filing. Although currently in draft form, the instructions are outlined in the MEC IR Publications page of the FTB website.

Helpful Resource

The FTB has a very helpful and detailed Registration and Enrollment Guide. It offers a step-by-step guide for filing as well as helpful comparisons between the federal and state processes.

As of September 30, 2020, all New York State employers must provide their employees with sick leave. For most employers, it must be paid leave. Some cities (including NYC) and counties had existing local laws that required sick leave. However, these laws have largely been amended to align with the new state law.

Leave Type and Duration Varies by Employer Size

The amount of sick leave that must be provided (and whether such leave is paid or not) varies based on employer size and income as follows:

• Employers with 100+ employees: Seven days (56 hours) of paid sick leave per calendar year.
• Employers with 5 to 99 employees: Five days (40 hours) of paid sick leave per calendar year.
• Employers with 1 to 4 employees (>$1 million*): Five days (40 hours) of paid sick leave per calendar year
• Employers with 1 to 4 employees ($1 million or less*): Five days (40 hours) of unpaid sick leave per calendar year

* Employer net income in previous tax year.

Uses of Leave

The statute establishes specific categories of leave for New York-based employees. The leave duration may be spread across any of the categories, but only one allocation of leave time is available for each employee per calendar year. The leave categories are as follows:

Sick Leave:

• A mental or physical illness, injury or health condition of an employee or the employee’s family member, regardless of whether such illness, injury or health condition has been diagnosed or requires medical care at the time the employee requests leave
• The diagnosis, care or treatment of an existing health condition of, or preventive care for, an employee or an employee’s family member.

Safe Leave:

• An employee or an employee’s family member who is a victim of domestic violence, a sexual offense, stalking or human trafficking in order to avail themselves of services or assistance.