Governor Newsom has signed Senate Bill 1237, sharply increasing the financial consequences for employers who repeatedly fail to file California’s required pay data reports.
Under the new law, employers who miss a filing deadline for the first time remain subject to penalties of up to $100 per employee, keeping that threshold unchanged.
However, the stakes rise dramatically for subsequent failures, with the maximum penalty per employee climbing from $200 to $1,000, representing a fivefold increase over the previous cap.
The practical financial exposure is substantial, as a company with 500 employees missing a second filing deadline could face up to $500,000 in civil penalties.
Under the prior cap, that same employer would have faced a maximum penalty of $100,000, meaning SB 1237 significantly shifts the cost calculation for non-compliant businesses.
The California Civil Rights Department must still obtain a court order to impose penalties, but the dramatically higher ceiling gives the agency considerably more leverage in enforcement actions.
Employers should prepare for another significant change affecting the May 2027 filing cycle, which will be the first subject to SB 1237’s enhanced penalties and new job classification requirements.
That filing cycle will require reporting under 23 Standard Occupational Classification job categories rather than the 10 EEO-1 categories used in prior years, adding considerable complexity to the compliance process.
This classification change, enacted in 2025, requires employers to map each worker to more granular job categories based on occupational function, demanding more detailed internal data management.
The enhanced penalty structure applies not only to the main pay data report required of employers with 100 or more employees, but also to a separate report covering workers hired through labour contractors.
Employers subject to the labour contractor reporting requirement must also disclose the ownership names of all labour contractors used, adding a further transparency obligation under the law.
A repeat failure on the labour contractor employee report carries the same $1,000 per-employee exposure as a repeat failure on the standard employee report, making consistency across both filings essential.
The bill does preserve an apportionment provision, allowing courts to divide penalties between an employer and a labour contractor if the contractor failed to supply the required pay data.
Businesses operating in California should audit their pay data reporting processes well ahead of the May 2027 deadline to avoid the significantly steeper financial consequences now in force.