Updated February 11, 2026
California Civil Rights Department: Essential Changes to 2025 Pay Data Rules
The California Civil Rights Department has announced significant changes to pay data reporting requirements taking effect in 2025~2026, creating substantial new compliance obligations for covered employers.
These modifications go beyond simple adjustments, requiring businesses to collect and report entirely new categories of employee information. Additionally, employers must adapt their data collection systems to accommodate exemption status tracking, employment type classification, and total annual weeks worked calculations.
However, businesses have limited time to prepare for these changes before the first reports under the new rules come due in February 2026. Consequently, HR departments and compliance teams need to begin preparation immediately to ensure their systems and processes can generate the required information accurately.
This article examines the essential modifications to California's pay data reporting framework, outlines the operational challenges these changes present, and provides a practical roadmap for employers to achieve compliance before the deadline arrives.
New Data Fields Required in 2025 Reporting
For the 2025 reporting year, covered employers must collect and report three entirely new data fields that significantly expand the scope of California pay data reporting. These additional requirements create more granular employee groupings and require systems capable of tracking employment classifications throughout the year.
Exemption Status: Exempt vs Non-Exempt Classification
Under the updated requirements, employers must identify whether each California employee is exempt from minimum wage and overtime pay provisions of both the California Industrial Welfare Commission wage orders and the federal Fair Labor Standards Act. Each worker must be classified into one of two categories:
- Exempt employees who are not subject to minimum wage and overtime requirements
- Non-exempt employees who are entitled to minimum wage and overtime protections
This classification will fundamentally change how employee groups are formed in the reports. Previously, exempt and non-exempt workers were grouped together based on race/ethnicity, sex, job category, and pay band. Now, these workers must be separated into different groups based on their exemption status. This creates significantly more granular reporting categories and expands the complexity of data collection efforts.
Employment Type: Full-Time, Part-Time, Intermittent
Another major addition is the requirement to classify each California employee into one of three employment type categories:
- Full-time – Employees assigned to regularly work full-time hours under the employer's standard or alternative workweek schedule
- Part-time – Employees assigned to regularly work less than full-time hours under the employer's standard or alternative workweek schedule
- Intermittent – Employees assigned to periodically or irregularly work either full-time or part-time hours under the employer's standard or alternative workweek schedule
Notably, this third "intermittent" classification represents a departure from traditional employment categorization and creates additional complexity, especially for organizations with hybrid or variable-hour roles. Many HR systems currently only track full-time versus part-time status, making this new intermittent classification particularly challenging to implement.
Total Annual Weeks Worked: Paid Leave Inclusion Rules
The third new data field requires reporting the total annual weeks worked by California employees during the reporting year. Importantly, this calculation must include any weeks during which employees received paid time off, including vacation time, sick time, or holiday time.
For reporting purposes, employers must follow these steps:
- Group employees by race/ethnicity, sex, job category, pay band, exemption status, and employment type
- Aggregate the total weeks worked during the reporting year for all California employees within each identical group
- Report this aggregated figure as "Total Annual Weeks Worked" for each employee group
If an employee is the only one in a particular grouping, the employer reports a count of one employee and the number of weeks that individual employee worked.
For labor contractor employees, the weeks worked refers specifically to the actual number of weeks worked for the reporting client employer during the relevant period. This distinction adds another layer of tracking complexity for organizations using contingent workers.
Since the updated reporting templates have already been designed to accommodate these new fields, submissions using old templates will be rejected. Therefore, employers must begin preparing their data collection systems immediately to ensure compliance.
Changes to Employee Grouping and File Schema
The introduction of new data fields fundamentally reshapes how employers must structure their California pay data reports. These changes create more complex file schemas and significantly increase the granularity of employee groupings beyond previous requirements.
New Grouping Dimensions: Exemption and Employment Type
For Reporting Year 2025, the California Civil Rights Department has expanded employee grouping dimensions. While previous reports classified employees by job category, race/ethnicity, sex, and pay band, the updated requirements now include exemption status and employment type as mandatory grouping criteria. This expansion creates substantially more granular data rows in the final report.
The practical effect of these additional grouping dimensions is significant. Each combination of job category, race/ethnicity, sex, and pay band must now be further subdivided by exempt/non-exempt status and full-time/part-time/intermittent employment type. As a result, employers will need to report many more distinct employee groupings than in previous years.
This change presents particular challenges when exemption status and employment type are not consistently recorded at the individual employee level. Organizations that have not previously maintained these classifications in their HR systems will need to develop standardized definitions and establish reliable tracking mechanisms across all establishments.
Whole Number Reporting for Weeks Worked
Another key change involves how weeks worked are calculated and reported. For RY 2025, the California Civil Rights Department requires a numeric "Total Annual Weeks Worked" field for each employee group row. This figure must be reported as a whole number, including rounding of group totals when necessary.
The definition of weeks worked includes all weeks during the reporting year when employees worked, plus any weeks when employees were on paid leave of any type. This includes vacation time, sick time, and holiday time.
Importantly, the guidance does not prescribe a single approach to handling partial weeks worked. Employers retain methodological flexibility in how they count and round partial weeks, though documentation of the chosen approach is advisable to ensure consistency across reporting periods.
Remote Worker Categorization: In-State vs Out-of-State
The 2025 reporting requirements also introduce significant changes to how remote workers are categorized. Instead of simply noting whether employees "worked remotely during the Snapshot Period" as in previous years, the updated framework requires three distinct counts for each establishment and employee group:
- Employees who are not remote
- Employees who work remotely within California
- Employees who work remotely outside California
Notably, the "remote outside California" count is only reportable for California establishments. Non-California establishments must enter zero in this field. For multi-state employers, this constraint may substantially impact aggregation logic and establishment mapping.
The guidance also clarifies that "remote worker" specifically refers to employees who are entirely remote with no expectation to regularly report in person. This precise definition matters when classifying hybrid workers who split time between remote and office locations.
Overall, these file schema changes require employers to reconfigure their data collection processes well in advance of the 2026 filing deadline. Many organizations will need to modify their HR systems to capture these new dimensions and ensure accurate aggregation of employee information across all required categories.
Operational Impacts on Data Collection and Systems
Implementing California's expanded pay data requirements demands substantial operational adjustments across multiple business functions. These modifications present technical hurdles that extend far beyond simple form completion.
Cross-Departmental Data Sourcing Challenges
The updated reporting framework necessitates unprecedented coordination between traditionally siloed departments. In fact, the new data fields force employers to combine information that typically resides in different organizational systems—spanning HR, timekeeping, payroll, and vendor management platforms. Many organizations store exemption status within HR systems rather than payroll feeds, increasing the likelihood of errors if these systems aren't properly aligned.
Moreover, inconsistencies often emerge when HR and payroll teams pull data on different dates or use varying definitions for employment classifications. For employers utilizing labor contractors, the challenges multiply as they must coordinate with multiple external entities to secure properly formatted data. The law clearly states that "labor contractors shall supply all necessary pay data to the private employer," yet establishing standardized reporting protocols across multiple vendors requires extensive advance planning.
Timekeeping and Payroll System Readiness
Organizations must thoroughly evaluate whether their current systems can accurately track and aggregate the newly required data points. For the weeks worked calculation in particular, employers should validate their timekeeping and payroll systems now to ensure they can capture and sum weeks worked accurately across the reporting year.
Furthermore, variable schedule environments—such as compressed workweeks, on-call rotations, or irregular hybrid schedules—create additional compliance risks because even minimal paid activity within a week triggers weeks worked reporting requirements. The expanded definition creates heightened risk for employers whose paid leave records exist outside their primary payroll platforms, as they may inadvertently underreport weeks worked if they fail to capture paid leave at the week level.
Handling Inconsistent or Missing Data Fields
Resolving data gaps represents one of the most critical challenges in preparing for the 2025 reporting cycle. Legal experts recommend employers take several proactive steps:
- Conduct cross-system audits spanning HR, payroll, timekeeping, and vendor data to identify and resolve inconsistencies
- Document classification frameworks and methodologies used for estimating fields like exempt employee hours
- Standardize employment type definitions across all establishments and apply them consistently
- Run preliminary analyzes using the new templates to identify potential gaps before the submission deadline
The absence of standardized definitions for intermittent employment in most HRIS systems could force employers to make judgment-based categorizations without clear benchmarks. Additionally, missing demographic fields—particularly race, ethnicity, or sex information—can delay or invalidate entire reports, making comprehensive data validation essential well before the filing deadline.
Ultimately, early preparation focusing on system integration and data quality will determine whether organizations can meet these expanded requirements without significant compliance risks.
Preparation Steps for Employers Before February 2026
With reporting deadlines approaching in 2026, employers must begin preparation immediately to ensure compliance with the California Civil Rights Department's expanded requirements. Taking proactive steps now will minimize last-minute scrambling and reduce compliance risks.
Assigning Ownership for Each Data Field
Early assignment of internal ownership stands as a crucial first preparation step. Employers should promptly identify which departments and team members will be responsible for collecting, validating, and reporting each required data element. This ownership assignment should span across HR, payroll, and IT departments, plus include coordination with labor contractors if applicable.
Developing a comprehensive timeline that allocates sufficient opportunity for data review and corrections is equally important. Given the complexity of the new requirements, this timeline should include buffer periods to address unexpected data challenges that may arise during the preparation process.
Standardizing Definitions Across Establishments
Subsequently, organizations must develop clear, consistent criteria for classifying employees, particularly regarding employment types and exemption status. Adopt standardized definitions for full-time, part-time, and intermittent classifications, then apply them uniformly across all establishments and departments.
This standardization is especially crucial for hybrid or variable-hour roles that may not clearly fit into traditional classifications. Accordingly, employers should review existing role descriptions to determine how these classifications apply to positions that don't neatly fit standard categories.
Testing Aggregation Logic for Weeks Worked
Indeed, one of the most technically challenging aspects of the new requirements involves calculating "weeks worked." Employers must determine whether their current payroll or timekeeping systems can reliably calculate and aggregate weeks worked information. This includes verifying that systems properly account for paid leave weeks in their calculations.
Early system validation is essential—employers should test their ability to capture and sum weeks worked accurately across the entire reporting year. This testing should include various employment scenarios to ensure the system handles edge cases correctly.
Documenting Estimation Methodologies
Finally, wherever estimation is required or permitted within the reporting framework, employers should meticulously document their methodologies. This documentation serves dual purposes: ensuring consistency in future reporting periods and providing defensibility if the reports face regulatory scrutiny.
For methodological choices not explicitly prescribed in the guidance (such as handling partial weeks), documentation becomes even more critical. Creating comprehensive records of all assumptions, data sources, and calculation methods will support both internal consistency and regulatory compliance.
By addressing these preparation steps early, employers can navigate the expanded California pay data reporting requirements more effectively and minimize potential compliance issues before the February 2026 deadline.
Unchanged Requirements and What Still Applies
Despite the substantial changes coming in 2025, several fundamental requirements remain unchanged in California's pay data reporting framework. Understanding these consistent elements helps employers maintain compliance while adapting to new data fields.
100+ Employee Threshold for Coverage
The employee threshold that triggers reporting obligations remains firmly in place. Private employers must submit pay data reports if they have 100 or more employees in either of two scenarios:
- The employer had 100 or more employees during the self-selected snapshot period between October 1 and December 31 of the reporting year
- The employer had 100 or more employees on a regular basis throughout the reporting year
Moreover, the integrated enterprise rule continues to apply. Employers with fewer than 100 employees must still file reports if they form part of an integrated enterprise that collectively employs 100 or more workers. This applies when there is common ownership, centralized management, or interrelated operations among affiliated entities.
W-2 Box 5 as Primary Pay Band Source
Throughout the changes, the California Civil Rights Department consistently maintains W-2 Box 5 wages as the primary source for determining pay band assignments. The twelve established pay bands, ranging from "USD 19239.00 and under" to "USD 239200.00 and over," remain identical to previous years.
Box 1 of the W-2 continues to serve as an acceptable alternative only when Box 5 data is unavailable. Employers using Box 1 instead of Box 5 should note this action in the clarifying remarks field of their reports.
Separate Reports for Payroll and Labor Contractor Employees
Under current rules, the requirement for separate reporting streams persists. Organizations meeting both thresholds must submit:
- A Payroll Employee Report covering employees directly on the company payroll
- A Labor Contractor Employee Report covering workers supplied through labor contractors
Fundamentally, these reports cannot be combined—employers must create and submit them separately. The distinction between California-based employees and those working outside California likewise remains intact in both reporting frameworks.
These stable elements provide a foundation of continuity amidst the significant changes detailed in previous sections, allowing employers to focus adaptation efforts on the new requirements while maintaining established compliance practices.
Conclusion
California's updated pay data reporting framework represents a substantial shift in employer obligations, not merely a minor regulatory adjustment. The addition of three new data fields—exemption status, employment type, and total annual weeks worked—fundamentally transforms how organizations must track and report workforce information. These changes create significantly more granular employee groupings while requiring sophisticated data collection capabilities many employers currently lack.
Accordingly, businesses must act now rather than delay preparation efforts. Most organizations will need to modify existing systems, standardize employment classifications, and develop new data aggregation methodologies. The February 2026 deadline appears distant but will approach quickly considering the comprehensive system changes required.
Employers should first establish clear ownership responsibilities across departments, then standardize definitions for all classification categories, particularly for the new "intermittent" employment type. Subsequently, testing data collection processes with sufficient time for troubleshooting will prove essential for compliance success.
Though certain elements remain unchanged—such as the 100+ employee threshold, W-2 Box 5 as the primary pay band source, and separate reporting requirements for payroll versus labor contractor employees—these stable components offer limited comfort amid the extensive new demands.
Overall, the 2025 California pay data reporting changes demand immediate attention from HR departments, payroll teams, and executive leadership. Organizations that begin preparation efforts promptly will navigate these complex requirements more effectively, while those delaying action risk significant compliance challenges when reporting deadlines arrive.
If you need employment litigation, please call Setyan Law at (213)-618-3655. Free consultation.
References
[1] – https://www.affirmity.com/blog/new-rules-california-pay-data-2025-reporting-year/
[2] – https://calcivilrights.ca.gov/wp-content/uploads/sites/32/2026/01/2025_California_Pay_Data_Reporting_Handbook.pdf
[7] – https://worldatwork.org/publications/workspan-daily/california-issues-updated-guidance-for-pay-data-reporting
[8] – https://calcivilrights.ca.gov/wp-content/uploads/sites/32/2025/01/PDR_California_Pay_Data_Reporting_Handbook.pdf
[9] – https://www.wrapbook.com/blog/california-pay-data-reporting-updates
