What You Should Know about EEOC's Proposal to Collect Pay Data

The Updated Proposal

On July 14, 2016, the U.S. Equal Employment Opportunity Commission (EEOC) published its revised proposal to collect summary pay data by race, ethnicity, and sex from employers that already file the EEO-1 report (https://federalregister.gov/a/2016-16692).

• The revised proposal carefully considers the utility of the data for enforcing the nondiscrimination laws and responds to public comments that the EEOC received in response to its initial proposal published in the Federal Register on February 1, 2016 as well as testimony from the March 16, 2016 public hearing.
• Under the revised proposal, employers with 100 or more employees that already file an EEO-1 report will provide summary pay data.
• The revised proposal continues to minimize the burden on employers while ensuring the pay data is useful for the EEOC and the Office of Federal Contract Compliance Programs (OFCCP) at the Department of Labor.
• The annual added cost to report the pay data, using the revised burden estimate, is approximately $416 per employer.
• Employers provide this data through an online system. Employers enter data only in those cells of the report where they have employees. The overwhelming majority of the cells are left blank.

When Would the EEOC Begin Collecting Pay Data from Employers?

In response to comments, employers would file the first new EEO-1 report, including pay data, by March 31, 2018.

• This gives employers 18 months to transition to the new system, rather than 12 months, as the EEOC originally proposed.
• March 31st provides employers time after they complete calendar-year tax forms, so they can report W-2 Box 1 numbers prepared for tax purposes. The EEOC would not require any special calculations, as the EEOC's original February 1, 2016 proposal did.
• The next EEO-1 report is due on September 30, 2016. There are no changes on this report. Employers will not be required to provide pay data this year. Then, employers do not have to file an EEO-1 report for 18 months, until March 31, 2018.

Why Collect Pay Data

Workers depend on the EEOC to advance opportunity and freedom from workplace discrimination. Although much progress has been made in the past 50 years, pay disparities continue to be a problem in the American workplace. Since the creation of the President's Equal Pay Task Force in 2010, the EEOC has investigated tens of thousands of charges of pay discrimination, and through enforcement efforts, the EEOC has obtained more than $85 million in monetary relief for those who have faced pay discrimination based on sex. Additionally, studies show that significant pay gaps exist in the U.S. workforce linked to sex, race, and ethnicity. Even when controlling for other factors, workplace discrimination is an important contributing factor to these pay gaps.

For Further Detail visit the EEOC's website

New Steps to Advance Equal Pay

On the anniversary of the signing of the Lilly Ledbetter Fair Pay Act, President Obama highlighted several actions that his Administration is taking to further advance equal pay for all workers.

• EEOC Action on Pay Data Collection:  The Equal Employment Opportunity Commission (EEOC), in partnership with the Department of Labor, is publishing a proposal to annually collect summary pay data by gender, race, and ethnicity from businesses with 100 or more employees.  The proposal would cover over 63 million employees.  This step – stemming from a recommendation of the President’s Equal Pay Task Force and a Presidential Memorandum issued in April 2014 – will help focus public enforcement of equal pay laws and provide better insight into discriminatory pay practices across industries and occupations. It expands on and replaces an earlier plan by the Department of Labor to collect similar information from federal contractors.

The EEOC is proposing revisions to its longstanding EEO-1 form to require all employers with 100 or more employees, not just contractors, who currently submit the EEO-1 to submit additional summary data on wages paid to their employees, including by gender, race, and ethnicity. As currently proposed, this information would be reported across 10 job categories and by 12 pay bands, and will not require the reporting of specific salaries of each individual employee.  The proposal is broader than one previously published by the Department of Labor, which would have applied only to federal contractors.

This new policy will encourage and facilitate greater voluntary compliance by employers with existing federal pay laws – by evaluating how they are currently paying their employees.  It will also assist the EEOC, and in the case of contractors the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), in better focusing investigations on employers that are unlawfully shortchanging workers based on their gender, race, or ethnicity.  In addition to expanding the scope of the data collection, the new approach will utilize an existing data collection mechanism familiar to most businesses, as many commenters had proposed.  In so doing, the proposed revisions have the potential to lower the compliance burden on businesses and the implementation costs to government. Under the proposal, employers would first submit pay data as of the September 30, 2017 EEO-1 filing deadline.

The proposed revision of the EEO-1 form will follow the normal procedures and public comment process required under the Paperwork Reduction Act before it can be implemented.  Anyone who wants to comment on the proposal will have 60 days after publication in the Federal Register to do so.  You can find additional information on the EEOC's website here.