Punxsutawney Phil, the renowned winter forecaster did not see his shadow on February 2nd, thus forecasting an early end to winter. Unfortunately another announcement made on February 2nd, did not offer as pleasant a forecast for companies. The Obama administration announced February 2nd, also the anniversary of the Lily Ledbetter Fair Pay Act, that they want all employers with more than 100 employees to report pay data to them in order to root out pay discrimination.
The vehicle for reporting this information will be the EEO-1 report which is currently used to report the make-up of a company’s employee population. It is submitted each September 30th and must include all employees of the company categorized by race, gender, and job category. It is only required of employers who have more than 100 employees. The Obama administration, in a press release announced:
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 our 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 government announced this requirement will be effective September 2017.
Supersedes OFCCP action
As the announcement said, this replaces an earlier plan to collect this type of information via the OFCCP requirement of just federal contractors. The expansion covers even companies that do not have government contracts. This step has allowed a way around the fact that Executive Orders only affect contractors. This “rules change”, of adding pay data to the EEO-1, will affect many companies.
Although the data submitted to the government cannot be published, it can be used to prosecute companies for pay discrimination. According to on law firm’s assessment “Unlike the OFCCP’s proposal, which required year-end W-2 compensation data, the EEOC’s proposal will require W-2 earnings for the previous twelve months from any pay period between July 1st and September 30th (same as the current EEO-1 report). As the proposal requests W-2 information, this will include salary, bonuses, commissions, tips, taxable fringe benefits, and other forms of reportable earnings.” The law firm also reports that the Obama administration grossly underestimates the time, effort and cost associated with such reporting.
What this new reporting requirement is trying to get at is pay inequality. The Obama press release reused the oft stated “fact” that women only earn “79 percent of a man’s median earnings.”
Regardless of the truthfulness of the argument there is little dispute that companies will have to prepare for and adjust to this reporting. If indeed a company is engaging in illegal pay discrimination they will be found out and punished. It is suggested that companies prepare now by doing assessments and rectifying unjustified pay differentials.