While new pay data reporting requirements in California and Illinois have grabbed pay equity headlines, we are seeing a ground swell in another type of pay transparency requirements: mandatory pay disclosures to applicants, current employees, or both.
Pay range disclosure laws go beyond the host of state laws that came online several years ago and establish employees’ rights to request information, disclose, and discuss their own wages. Rather, these laws obligate employers to affirmatively (and sometimes proactively) disclose the pay range for a given position under specific circumstances. Employers in nine jurisdictions and counting are subject to such requirements: California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, and Washington, as well as Ohio cities Toledo and Cincinnati. At present, another nine states have similar bills pending. READ MORE
Employers face increasing demands and pressure to ensure and declare equitable pay for employees, not only from within their own workforces, but also from clients, customers, and government leaders. While states continue passing increasingly progressive pay equity laws, the requirements of such laws may not align with the purpose and intent of federal or state equal pay laws. Employers should be mindful of the risks associated with how state agencies may use pay data collections and be prepared to explain their practices and provide further response, if needed. READ MORE
As COVID-19 vaccination programs gain speed across the country, and employers consider long-term reopening plans, the Equal Employment Opportunity Commission (EEOC) has announced that starting April 26, 2021, it will begin the EEO-1 data collections it had delayed for nearly a year due to the pandemic. Recognizing the ongoing impacts of the pandemic, however, it is providing twelve weeks (instead of just 10) to complete submissions. Employers will need to submit two years of data (for 2019 and 2020) by Monday, July 19, 2021. Unlike the last time, employers will not need to submit “Component 2” pay data (as we reported here).
Since 2015, pay gap disclosure has been front and center on the activist shareholder proposal landscape from an employment and workforce perspective. Following closely on the heels of tragic events of last summer and the significant advancement of the Black Lives Matter movement, activist shareholder groups have pivoted away from proposals requiring disclosures of pay gap statistics and are instead focused on other dimensions of internal diversity, equity, and inclusion (“DEI”). These initiatives seek more broad-based disclosure of whether and how companies are managing gender and racial disparities in representation – including, for example, in the boardroom and at senior management levels within an organization. Combined with recent rule changes at the U.S. Securities and Exchange Commission (“SEC”) with respect to required Human Capital Management disclosures, public companies should prepare for how they will respond to proposals seeking different and new disclosures regarding steps they are taking to expand and maintain diversity within their workforces.
California’s Department of Fair Employment and Housing (“DFEH”) has issued new guidance on the pay data reporting law enacted in September (see our coverage here) that established at the state level the equivalent of the EEOC’s discontinued EEO-1 pay data collection form. The law requires that starting March 31, 2021 every California employer with 100 or more employees who files a federal EEO-1 report must annually submit a pay data report to the DFEH.
On November 5, 2020, the Office of Federal Contract Compliance Programs (“OFCCP”) issued a final rule defining the evidentiary standards it will use for proving discrimination claims by federal contractors, revising the process for notifying contractors of potential violations, and outlining an option for contractors to participate in an “expedited” dispute resolution process. It will take effect on December 10, 2020. Notably, the rule deviates significantly from the version initially proposed by OFCCP on December 30, 2019, which relied far more heavily on statistics and came under intense scrutiny from the contractor community, including the U.S. Chamber of Commerce. According to OFCCP, the requirements laid out in the final rule will increase transparency and create clear parameters for contractor compliance with equal employment opportunity laws. READ MORE
On September 23, 2020 the Securities and Exchange Commission (“SEC”) adopted amendments to 17 C.F.R. § 240.14a-8 (“Rule 14a-8”), raising the bar for shareholders seeking to force votes on proposals. The rule comes on the heels of persistent and repeat shareholder proposals in various areas including, notably, pay gap data reporting.
On September 30, 2020, California Governor Gavin Newson signed SB 973, making California the first state to require employers to submit employee pay data by race and gender. As we previously reported, SB 973 is modeled after the now discontinued federal EEO-1 pay data collection form, which was harshly criticized for its heavy burden on employers and lack of utility in assessing for pay equity or pay discrimination (see prior Equal Pay Pulse blogs here, here, here, and here).
In the wake of the Black Lives Matter movement and a nationwide push towards greater equality, transparency and accountability, the California legislature this week passed a bill (SB 973) that would establish at the state level the equivalent of the EEOC’s discontinued EEO-1 pay data collection form. If signed by Governor Newsom, SB 973 would require that starting March 31, 2021 every California employer with 100 or more employees who files a federal EEO-1 report must annually submit a pay data report to the California Department of Fair Employment and Housing (“DFEH”) that discloses: (1) the number of employees by race, ethnicity, and sex in each of ten broad job categories, and (2) the number of employees by race, ethnicity, and sex whose annual earnings (defined as W-2 income) fall within each of the pay bands used by the United States Bureau of Labor Statistics in the Occupational Employment Statistics survey. Employers with multiple establishments must submit a consolidated report, as well as a report for each establishment. READ MORE
On July 16, the EEOC announced plans to fund an independent study to evaluate pay data submitted by employers for fiscal years 2017 and 2018 through Component 2 of the EEO-1 form, both to inform potential next steps for the data, as well as to guide any potential future collections. As we reported last March, after a tumultuous history, the EEOC decided against renewing its request for authorization to continue collecting pay data under Component 2 of the EEO-1 form, which reflected employees’ W-2 earnings and hours worked across broad job categories, broken down by gender, ethnicity, and race. The EEOC’s decision in March ended a four-year saga – including litigation – over whether the pay data collection would go forward at all. Much of the controversy stemmed from critiques that the burden and confidentiality concerns implicated by the Component 2 submissions outweighed any potential benefit, particularly given the form’s reliance on W-2 earnings (as opposed to base pay or total compensation awarded for work performed in a given year), combined with the breadth of the pay bands and job categories used, as well as the inability for most employers to accurately track or report hours worked by exempt employees (as we reported here, here, here, here, here, here, here, here, and here). Despite last March’s announcement, the EEOC has not stated whether or how it plans to use the data it already has collected. READ MORE