California Raises The Stakes On Pay Data Reporting Failures

Governor Newsom has signed Senate Bill (SB) 1237, significantly increasing the penalties for employers who repeatedly fail to file California’s required pay data reports.

Under the new law, first-time failures remain subject to penalties of up to $100 per employee. But for subsequent failures, the maximum penalty jumps from $200 to $1,000 per employee—a fivefold increase.

Miss once, pay a little. Miss twice, pay a lot. A company with 500 employees that misses a second filing deadline could face up to $500,000 in civil penalties—compared to $100,000 under the prior cap. The California Civil Rights Department (CRD) must still obtain a court order to impose penalties, but the dramatically higher ceiling gives the agency considerably more leverage in enforcement actions.

SB 1237 also requires CRD to publish aggregate, anonymized reporting data annually. But individual company filings remain confidential—the statute expressly exempts them from disclosure under the California Public Records Act.

Employers should also note that the May 2027 filing cycle—the first subject to SB 1237’s enhanced penalties—will require reporting under 23 Standard Occupational Classification (SOC) job categories rather than the 10 EEO-1 categories used in prior years. This change, enacted in 2025, requires employers to map each employee to more granular job classifications based on occupational function. Organizations that have not yet updated their HRIS systems or reporting processes should begin preparation now to avoid compliance gaps when the new requirements take effect.

Key Takeaway

SB 1237 takes effect January 1, 2027. Employers with 100 or more employees should use the intervening period to audit their pay data reporting processes, ensure their systems can accommodate SOC-based classifications, and calendar the annual filing deadline (the second Wednesday of May).