California Strengthens Pay Equity With Enhanced Reporting Mandates

On October 13, 2025, Gov. Gavin Newsom signed Senate Bill (SB) 464 into law, ushering in stricter requirements for pay data reporting. Beginning on January 1, 2026, this bill seeks to combat wage disparities by increasing compliance mandates on employers and labor contractors. SB 464 gives the Civil Rights Department (CRD) sharper enforcement and analysis tools for the purpose of combating persistent gender and racial pay gaps.

California’s Equal Pay Act, enacted in 1949, mandates equal pay for equal work regardless of gender. However, according to data collected by the CRD, women in California earn about 84 cents for every dollar men earn, with even wider gaps for women of color. SB 464 seeks to illuminate these disparities by mandating more detailed reporting.

Previously, SB 1162 enacted in 2022 had required employers with 100 or more employees to submit annual reports to the CRD detailing wages, hours, and demographic breakdowns by race, ethnicity, and sex. These reports, due by May 2023 and biennially thereafter, highlighted pay gaps in sectors such as tech and finance.

Now SB 464 refines this framework. The bill amends Government Code section 12999, which governs pay data submissions, and adds a new section focused on data confidentiality and storage. SB 464 introduces three significant changes:

1. Mandatory Civil Penalties for Noncompliance: Under prior law, courts could impose fines of $100 per employee for a first violation and $200 for subsequent ones if the CRD requested it. SB 464 flips this to mandatory penalties upon the CRD’s request, eliminating judicial discretion.
2. Shift to Standard Occupational Classification (SOC) Codes Starting in 2027: Current reports use the broader EEO-1 job categories, which lump diverse roles into eight groups (e.g., “professionals” or “executives”). Beginning with the 2027 reporting cycle, employers must adopt the federal government’s 23 SOC categories, offering finer granularity. For instance, “legal occupations” and “health care practitioners” would be separated (when previously they were all considered “professionals”), allowing the CRD to pinpoint disparities within subfields.
3. Stricter Data Storage and Privacy Rules: A new provision requires employers to store demographic data (e.g., race, sex) separately from personnel records, reducing risks of misuse or breaches. Individually identifiable information remains confidential under the California Public Records Act (CPRA), with aggregated data only released publicly.

Note that these updates apply only to private employers with more than 100 employees (or more than 100 workers via labor contractors) in California. Businesses should also be on the lookout for an increase in the number of audits.

Please contact Carlton Fields’ Labor and Employment Practice if you have questions about how to comply with this new California employment law.

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