EEOC Seeks to Require Summary Pay Data From Employers

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By Kevin McGowan

Jan. 29 — The Equal Employment Opportunity Commission is seeking to require expanded pay information from employers as part of the Obama administration's ramped-up effort to combat the persistent gender gap in employee compensation, the EEOC announced Jan. 29.

The EEOC proposal, to be published in the Federal Register Feb. 1, would add aggregate data on pay ranges and hours worked to covered employers' EEO-1 reports beginning Sept. 30, 2017. A 60-day public comment period on the proposal will end April 1.

The proposed revised EEO-1 form, which would cover businesses with more than 100 employees including federal contractors, was announced at a White House commemoration of the Lilly Ledbetter Fair Pay Act's seventh anniversary .

An advocacy group for women and families welcomed the news, while employer representatives reacted warily, warning of potential administrative burdens and the data triggering “false positives” regarding alleged discrimination.

Speaking at the ceremony, President Barack Obama said although progress has been made, there's “a lot more to do” to close the gender pay gap.

The median wage of a woman working full time in the U.S. is about $39,600 a year, only about 79 percent of men's median earnings of $50,400 a year, the administration said. The picture is even bleaker for black women, who earn about 60 cents on the dollar compared with white men, and for Latinas, who earn 55 cents on the dollar compared with white men, Obama said.

The pay gap “doesn't just offend our values,” but paying women less makes it harder for families to pay the bills, save or plan for secure retirements, Obama said.

Obama Says Information Will Help Employers

The EEOC's proposal that employers collect and report pay data categorized by race, gender and ethnicity will enable employers to get a “clear picture” of their own practices and help the federal government enforce the existing equal pay laws, Obama said.

Congress should take up and pass the Paycheck Fairness Act (H.R. 1619, S. 862), as well as raise the federal minimum wage and approve other legislation that would provide paid sick and family leave and further protect pregnant employees from discrimination, Obama said. A number of states, including California and New York, enacted new equal pay laws last year and more than 20 states expect to see legislation introduced this year, according to other speakers at the event.

“This is a ‘win win' situation if we think about it the right way,” Obama said, citing the potential economic benefits of treating women fairly in the workplace.

The White House Council of Economic Advisers released an issue brief Jan. 29 that explores the state of the gender pay gap, the factors influencing it, and administration policies that can help address it.

The White House May 23 will host a summit, “The United State of Women,” together with the Labor Department, the State Department, the Aspen Institute and Civic Nation.

The summit, to be held two years after a White House Summit on Working Families, will be an opportunity to mark progress for women and girls domestically and internationally during the course of Obama's presidency and to discuss the challenges they still face, the administration said.

EEOC and DOL Collaborate

Also speaking at the White House, EEOC Chair Jenny Yang said the EEOC proposal wouldn't force employers to divulge specific pay rate information for individual employees but instead to report pay bands across 10 different job categories.

The EEOC will work in partnership with the Labor Department to collect and analyze the data, Yang said. The information will be used to focus wage discrimination investigations, identify existing pay disparities and help employers evaluate their own practices, she said.

“Too many hard working Americans are still not paid equally for equal work,” Yang said. “Our experience and the research demonstrates that, even when people perform the same work and have the same education, qualifications and experience, significant gaps in earnings persist.”

The EEOC proposal replaces the proposed Equal Pay Report that the DOL's Office of Federal Contract Compliance Programs was developing for federal contractors under Executive Order 11,246.

By collecting the information as part of the existing EEO-1 report process, the proposal will ease the administrative burden on covered employers, Yang said.

In a Jan. 29 statement, Secretary of Labor Thomas E. Perez said the administration “can't deliver on the promise of equal pay” unless it has “the best, most comprehensive information about what people earn.”

The DOL expects that the data collection will help employers evaluate their own pay practices to prevent discrimination in compensation, Perez said.

“The data collection also gives the Labor Department a more powerful tool to do its enforcement work, to ensure that federal contractors comply with fair pay laws and to root out discrimination where it does exist,” he said.

Speaking at the White House event, Perez said that “data is indeed power” and harnessing that power will allow the administration to make quicker strides toward pay equity.

“When women succeed, America succeeds,” Perez said.

Women's Group Welcomes News

The National Partnership for Women and Families in Washington hailed the EEOC's action as “very welcome” news.

With the new data, the EEOC and the DOL “will be much better able to identify and stop wage discrimination of all kinds,” Debra Ness, the partnership's president, said in a Jan. 29 statement.

“This is a bold, important step that will capture salary data from employers that collectively employ more than 63 million workers,” Ness said, adding that there's “no time to waste” in combating the pay gap.

“We urge the EEOC to proceed quickly to finalize the updated form so data collection can begin in 2017,” Ness said.

The partnership will “fight for budgets sufficient for the EEOC to analyze and report on what the data show, and for the EEOC and DOL to ensure vigorous investigation and enforcement activities,” Ness said.

Employer Representatives See Problems

But employer representatives said the EEOC's proposal, if implemented, could cause administrative headaches as well as increased risks of liability.

The EEOC announcement is a “game changer” and a “draconian development” for employers, said Greg Keating of Choate, Hall & Stewart in Boston.

Organizations representing large employers probably will express strong opposition to the EEOC's proposal, Keating told Bloomberg BNA Jan. 29.

If implemented as proposed, the EEOC's requirement would expand employers' potential liability, subjecting them to increased agency investigations and enforcement actions, Keating said.

It also would place “major administrative burdens” on covered employers, as producing the required pay data isn't as simple as the EEOC maintains, Keating said.

Employers can't draw the requested information simply from employees' W-2 forms, which themselves are questionable as an accurate source of potential pay disparities, Keating said.

The EEOC's references to comparisons within 12 pay bands also is troubling, as legitimate reasons other than unlawful bias might account for pay differences within those bands, he said.

Taken together, the EEOC proposal represents “a major intrusion” on employers doing business in the U.S., Keating said.

Practitioner Questions Confidentiality Assurances

The EEOC's assurance that it will keep employers' pay data confidential doesn't necessarily mean it will, Keating said. For example, data submitted to the OFCCP can be subject to Freedom of Information Act requests and there's no guarantee that pay data submitted to the EEOC couldn't also be subject to FOIA, he said.

Employer concerns about expanded liability, confidentiality and the “operational aspect” of producing the information all make the EEOC's proposal unwelcome news, said Keating, who chairs his firm's labor, employment and benefits group.

There are also “serious questions” about relying on the W-2 data, as pay could be influenced by shift differentials, an employee's willingness to work overtime and other factors, Keating said. An employee's W-2 form “doesn't tell the whole story by any means,” he said.

Pay differences within pay bands also can occur for many reasons that have nothing to do with gender or race bias, Keating said. So the data on which the EEOC intends to rely is “quite suspect” as an indicator of any unlawful practice, he said.

It's also little comfort that the EEOC is seeking the pay information through the EEO-1 form, as the proposal would “quadruple” covered employers' current reporting requirements, Keating said.

Michael Eastman, vice president for public policy at the Equal Employment Advisory Council in Washington, said that if the EEOC proposal goes into effect, employers will be turning over “a lot more information” on the EEO-1 forms. The EEAC is an association of large employers.

Based on employers' experience under the EEO survey that was required during the Clinton administration, the data might “trigger a lot more false positives” at the EEOC regarding alleged discrimination, Eastman told Bloomberg BNA Jan. 29.

Kristin Michaels of McDermott, Will & Emery in Chicago said the EEOC proposal also contains no information on how the agency plans to assess, compare or use the pay information submitted by employers.

While the proposal is quite detailed on how employers should assemble and submit the requested data, there's no guidance on how the agency will use the information, Michaels told Bloomberg BNA Jan. 29.

The EEOC said it intends to develop software to analyze the data but provides no clue as to the content of that analysis, which poses “a real problem” for employers, Michaels said.

In an EEOC-commissioned report issued in 2012, the National Academy of Sciences recommended that if the agency collected employers' pay data, it should look at employees' “rates of pay” rather than “earnings,” Michaels noted. The NAS report also said the EEOC should have a “comprehensive plan' on how it would use such data before requiring it from employers, Michaels said.

But the EEOC proposal seems to ignore both those suggestions from the NAS, Michaels said.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the EEOC's proposed EEO-1 revision is at http://src.bna.com/ciy. The Council of Economic Advisers' report is at http://src.bna.com/cjf.