California Boosts Fines for Pay Data Reporting Failures
California’s new law increases penalties for failing to file pay data reports starting May 2027.
Why it matters: This increases legal and financial risks for employers, emphasizing growing regulatory focus on pay equity transparency in California.
- SB 1237 signed by Governor Newsom on September 30, 2026, increases penalties for pay data reporting violations.
- First-time report failures: up to $100 per employee; subsequent failures: up to $1,000 per employee.
- New penalties apply starting with the May 2027 filing cycle.
- Employers must use 23 SOC job categories for pay data reporting, replacing the previous 10 EEO-1 categories.
California Governor Gavin Newsom signed Senate Bill 1237 into law on September 30, 2026, significantly increasing penalties for employers who fail to file required pay data reports. These stricter penalties reflect the state's intensified commitment to addressing pay inequity and enforcing transparency.
Under SB 1237, first-time failures to file pay data reports remain subject to penalties of up to $100 per employee. However, subsequent failures face greatly increased fines of up to $1,000 per employee, a fivefold jump from the previous $200 maximum penalty. These enhanced fines take effect beginning with the May 2027 filing cycle.
The legislation also introduces a new reporting framework. Employers will be required to categorize pay data using 23 Standard Occupational Classification (SOC) job categories, replacing the prior 10 Equal Employment Opportunity (EEO-1) categories. This change aims to provide more detailed insights into occupational pay disparities.
In addition, SB 1237 mandates that the California Civil Rights Department (CRD) annually publish aggregate and anonymized pay data to promote transparency and public accountability, while individual employer reports remain confidential and exempt from public disclosure under the California Public Records Act.
Kevin Kish, Director of the California Civil Rights Department, said, "California continues to lead the fight against pay inequity," underscoring the state’s ongoing enforcement focus.
Employers and legal compliance teams should prepare for these changes by reviewing their pay data reporting processes and ensuring timely, accurate filings in the new SOC categories to avoid substantial fines starting next year.
By the numbers:
- $100 — maximum penalty per employee for first-time pay data reporting failures
- $1,000 — maximum penalty per employee for subsequent failures, a fivefold increase
- 23 — SOC job categories required for reporting starting May 2027
What's next: Employers must comply with the new SOC job category reporting and face higher penalties starting May 2027 filings.