23 new job categories, mandatory penalties, and new data storage rules, some already in effect
California has changed how employers report pay data to the state. Governor Newsom signed Senate Bill 464 (SB 464) on October 13, 2025. It updates California Government Code section 12999 in two stages. The goal is to give the state more detailed data so it can spot pay gaps between groups of workers.
Some of the new rules have applied since January 1, 2026. The biggest change arrives with the next report, and the data for that report is being gathered right now. Here’s what’s changing and how to get ready.
Who has to file
California has two pay data reports, and both go to the California Civil Rights Department (CRD) by the second Wednesday in May each year.
· The payroll employee report applies to private employers with 100 or more employees and at least one employee assigned to or working in California.
· The labor contractor employee report applies to private employers with 100 or more workers placed through labor contractors during the prior year. This is a separate report, and the employer must also list the owners of each labor contractor it used.
Each report shows how many people work in each job category, sorted by race, ethnicity, and sex. It also includes pay ranges and hours worked.
What changed in 2026
Three parts of SB 464 took effect on January 1, 2026.
· Demographic data must be stored separately. Any race, ethnicity, or sex data that an employer or labor contractor collects for these reports must be gathered and kept apart from workers’ personnel files.
· Penalties are now mandatory. If an employer doesn’t file and the CRD asks a court for penalties, the court must impose them. Penalties can reach $100 per employee for a first failure to file and $200 per employee for each failure after that. Before SB 464, the court could choose whether to impose them.
· Labor contractors can share the penalty. If an employer can’t file a complete report because a labor contractor didn’t provide its data, the court may assign part of the penalty to that contractor.
What changes for the May 2027 report
Starting January 1, 2027, reports will no longer use the 10 job categories from the federal EEO-1 report. Instead, employers will sort workers into 23 groups drawn from the Standard Occupational Classification (SOC) system, which federal agencies use to classify jobs. Examples include legal occupations, health care support occupations, and computer and mathematical occupations.
It’s easy to assume this change can wait until 2027, but the timing works differently. Each report covers the prior calendar year, so the report due May 12, 2027, will use the new categories for 2026 data. Employers count their workforce using one pay period of their choice between October 1 and December 31 of the reporting year. For the first report under the new categories, that window is already open.
It’s also tempting to reuse EEO-1 groupings, but they won’t carry over neatly. The new categories are organized by type of work, not by level. For example, the old “Professionals” group covers many kinds of roles that now fall into separate categories. Most employers will need to look at each job title again.
Why labor contractor data matters to both sides
If you place workers with California clients, or you use contingent workers in California, this law likely touches your business.
The client employer files the labor contractor report. But the law requires the labor contractor to supply the pay data the client needs. When that data is late, incomplete, or sorted the wrong way, the client’s report falls short, and both sides can face penalties.
That makes this a shared job. Client employers need complete, well-organized data from their labor contractors. Staffing agencies and other labor contractors need to deliver that data on time and in a form that fits the new categories.
Steps to take before year end
1. Confirm whether you’re covered. Count your payroll employees and the workers you use through labor contractors.
2. Check how you store demographic data. Make sure it’s kept apart from personnel files.
3. Start mapping job titles. Decide which new category fits each role before year end, so you have time to fix gaps.
4. Plan ahead with your labor contractors or clients. Find out what data you’ll receive or need to send, and when, so you can build it into your reporting timeline.
Looking further ahead, make sure your HR and payroll systems can store a category for each job title, so new roles are sorted the same way every time. Clear job titles and consistent job descriptions make reporting easier year after year, and they can
help you find and fix pay gaps early. The state may share more guidance on applying the new categories, so check the CRD’s pay data reporting FAQ for updates.
How People2.0 can help
When People2.0 serves as employer of record for workers placed with California clients, we act as the labor contractor under this law. That means we supply the pay data our clients need for their labor contractor reports. As the employer of record, we already run payroll and file W-2s for these workers, so the earnings and hours data comes straight from our records. We maintain processes designed to comply with California’s demographic data storage requirements.
If you’re a current People2.0 client, you don’t need to gather this data yourself for workers on our payroll. Your People2.0 representative can tell you what we’ll provide and when. For other questions, you can reach our Human Resources team at HR@People20.com.
If you’re exploring your options, these new rules show why the right partner matters. Keeping up with changing reporting rules, storing sensitive data correctly, and getting the details right for every worker takes time and care. As your employer of record, People2.0 takes on that work, so you can focus on your people and your clients. Talk with our team to learn how we can help.
A note on independent contractors: California’s pay data reports cover workers on payroll. Independent contractors engaged through an agent of record (AOR) arrangement generally fall outside these reports.
