EEOC Seeks More Pay Data

Most private employers with 100 or more employees, and certain federal government contractors with 50 or more employees, are required to annually submit “The Employer Information Report” (known as the EEO-1) to the Equal Employment Opportunity Commission (EEOC) and the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP). The EEO-1 directs employers to number their employees by job category and by gender, race and ethnicity within those job categories. The government uses the data collected through these reports for several purposes, including enforcement and research. Reporting this data is not voluntary for covered employers. Title VII of the Civil Rights Act of 1964 granted the EEOC legal authority to require the EEO-1.

On January 29, 2016, President Obama announced a new executive action, which amends the current EEO-1 such that employers will be required to submit information about their employees’ compensation within the existing job categories. The announcement coincided with the anniversary of the 2009 Lilly Ledbetter Fair Pay Act, an amendment to Title VII, which resets the 180-day statute of limitations for an employee filing an equal-pay lawsuit regarding pay discrimination with each new paycheck that allegedly evidences discriminatory treatment of the employee.

The new proposed EEO-1 adds 12 pay bands to each of the 10 general job categories contained in the form. Under the proposed EEO-1, all employers, including federal contractors, with 100 or more employees must submit pay data. Federal contractors with 50-99 employees would not report pay data but would continue to report ethnicity, race, and gender by job category. Non-contractor employers with one to 99 employees and federal contractors with one to 49 employees would not be required to file the EEO-1 report, consistent with the current EEO-1 reporting requirements. The proposal covers more than 63 million U.S. workers, according to the January 29, 2016, White House press release regarding the change. The proposed regulation was jointly published by the EEOC and the Department of Labor.

This new EEO-1 proposal expands on and replaces an earlier plan by the Department of Labor to collect similar information from federal contractors. In 2014, the DOL began an effort to require federal contractors to submit wage data to the federal government based on gender and race after receipt of a Presidential Memorandum instructing the Secretary of Labor to do so. The current proposal replaces that plan. The EEOC accepted public comments on the proposed modification until April 1, 2016. The EEOC will hold a public hearing about this proposal at a time and place to be announced. According to the EEOC’s website on the proposal: After coordination with OFCCP, the EEOC will vote on a final version of the revised EEO-1 and send it to the Office of Management and Budget for final review and approval under the Paperwork Reduction Act. If and when the current proposal becomes a final rule, covered employers will be required to provide this information beginning in September 2017. An example of the proposed EEO-1 form is available at http://www.eeoc.gov/employers/eeo1survey/2016_new_survey.cfm.

The EEOC does not publish individual employee and employer data, but will aggregate the information by industry and area and make that information publicly available. Federal contractor data is confidential to the maximum extent permitted by law, in accordance with the Freedom of Information Act, Exemption 4 and the Trade Secrets Act.

These new disclosure requirements will undoubtedly incentivize employers to address pay discrepancies or risk claims by the federal government if left unaddressed. However, employers should be aware of a potential increase in administrative burden, a concern that the EEOC has acknowledged. For example, compiling the pay information entails reporting using payroll periods between July 1 and September 30, rather than a calendar year. In addition, pay for part-time workers must be projected for a full year. These types of reports may result in inaccurate information that later becomes subject to disclosure in litigation. For this reason, employers should endeavor to document their reporting methodologies while compiling and preparing pay data reports.

The increased federal focus on disclosure inherent in the new EEO-1 proposal, coupled with the propagation of pay inequity laws at the local level, are good reasons for employers to focus or re-focus on pay practices. Employers may find that their pay practices, over time, have inadvertently resulted in pay inequity at their workplaces in violation of existing laws.