In August 2014, the Department of Labor’s Office of Federal Contractor Programs (“OFCCP”) proposed that federal contractors report compensation information on an Equal Pay report. Amid significant contractor comments that OFCCP coordinate with the EEOC to amend the Employer Information Report (“EEO-1”), EEOC did so on January 29, 2016. The EEOC intends to ask the Office of Management and Budget to approve additional data collection that would require most employers to submit aggregate data on pay ranges and hours worked. The EEOC believes that the additional data “will assist [EEOC and OFCCP] in identifying possible pay discrimination and assist employers in promoting equal pay in their workplaces.” However, questions remain whether this data would yield any meaningful analysis of actual pay differences that would assist either agency in uncovering pay discrimination.
Background on EEO-1 and Prior Efforts to Collect Pay Data
Currently, the EEO-1 requires certain covered employers with more than 50 employees (contractors) or 100 employees (private industry) to report annually the number of individuals they employ by job category and by race, ethnicity, and sex.
In 2010, the President’s National Equal Pay Task Force was formed to identify ways to improve enforcement of federal laws prohibiting pay discrimination. As a result, the EEOC contracted with the National Academies of Sciences (“NAS”) to study various means to step up federal pay enforcement efforts. Notwithstanding the recommendation that EEOC and OFCCP work together, OFCCP acted on its own and issued its proposal. The EEOC has said that OFCC will utilize the new EEO-1 instead of moving forward with the Equal Pay report.
EEOC’s Proposed Revisions to EEO-1
Under the proposed rule, beginning in September 2017, EEO-1 filers with 100 or more employees (both federal contractors and private industry) would be required to include two additional data components to EEO-1 reports—pay data and hours worked.
W-2 earnings will be used as the source of the pay data. Employers will not be required to provide pay rate information for individuals. However, employers will be required to collect aggregate W-2 data in 12 pay bands for the 10 EEO-1 job categories. Employers will then count and report the number of employees in each pay band. According to the EEOC, these pay bands will allow it “to compute within-job-category variation, across-job-category variation, and overall variation, which would support the EEOC’s ability to discern potential discrimination while preserving confidentiality.”
Employers will be required to collect the total number of hours worked by the employees included in each EEO-1 pay band. The hours worked data “will allow for analysis of pay differences while considering aggregate variations in hours.”
According to the EEOC, the new data “would provide EEOC and [OFCCP] with insight into pay disparities across industries and occupations and strengthen federal efforts to combat discrimination.” The EEOC and OFCCP “would use this pay data to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.” In addition, the EEOC plans to publish aggregated data (likely by industry and geographic area) with the hopes that employers will use the published data to analyze their own pay practices to facilitate voluntary compliance.
This proposal would not impact contractors that have between 50 and 99 employees—they will not be required to submit pay and hours worked data. The new requirements will also not change the September 30th deadline for filing EEO-1 reports.
The EEOC’s proposed revisions were published in the Federal Register on February 1, and the public comment period will remain open for 60 days after publication.
Implications for Employers
First, producing the pay and hours worked data creates an additional administrative burden for employers. The EEOC’s estimate of 6.6 additional annual burden hours to comply with the new reporting requirements appears dramatically low. In response to OFCCP’s proposal, the U.S. Chamber of Commerce estimated that it would take over 500 hours for contractors to comply. . EEOC seeks comments on the burden hours
Second, it is unclear how the EEOC intends to use this new data. While OFCCP made it clear that it intended to use its data as an element of its audit selection criteria, the EEOC’s intended use is much broader. It remains to be seen how the expanded report will factor into charge investigations.
Third, with regard to the data itself, numbers of employees in particular pay bands and hours worked may have little meaning since numerous factors go into pay decisions that may account for pay differences. See “The Pay Gap, the Glass Ceiling, and Pay Bias: Moving Forward Fifty Years After the Equal Pay Act,” 29 ABA Journal of Labor & Employment Law 395, 402-04 (2014) by Gary Siniscalco, Lauri Damrell and Clara Morain Nabity.
Employers subject to the EEOC’s proposed revisions should monitor developments on these potentially significant changes to EEO-1 and consider submitting public comments on the EEOC’s proposal.