Government To Collect Pay Data To Combat Wage Discrimination

February 4, 2016

The Equal Employment Opportunity Commission (EEOC) recently announced a proposal to collect pay data from employers. The agency plans to use the information it collects to combat wage discrimination.

As a way to combat wage discrimination, the EEOC is specifically proposing to revise the Employer Information Report (EEO-1) to include collecting pay data from employers, including federal contractors, with more than 100 employees. President Barak Obama announced the proposal on January 29, 2016 in conjunction with the White House commemoration of the seventh anniversary of the Lilly Ledbetter Fair Pay Act.

The Equal Employment Opportunity Commission (EEOC) recently announced a proposal to collect pay data from employers. The agency plans to use the information it collects to combat wage discrimination.

Currently, the federal government uses EEO-1 reports to collect race, ethnicity, sex, and job category data from private employers. This proposal would add aggregate data on pay ranges and hours worked to the information collected. According to the EEOC, the new pay data would provide the agency with insight into pay disparities across industries and occupations. It could then use the information to evaluate employment discrimination complaints, identify investigation targets, and detect pay disparities trends that may warrant additional study.

“More than 50 years after pay discrimination became illegal it remains a persistent problem for too many Americans,” EEOC Chairwoman Jenny R. Yang said in a press statement. “This information will assist employers in evaluating their pay practices to prevent pay discrimination and strengthen enforcement of our federal anti-discrimination laws.”

In response to potential pushback from employers, the EEOC proposal highlights the revised report will collect salary data from employees’ W-2 earnings and hours worked, which EEO-1 filers already maintain in the ordinary course of business. Of course, compiling and submitting the data will still involve some administrative burden.

The EEOC’s proposed changes have been published on the Federal Register website, and the public will have 60 days from that date April 1, 2016, to submit comments. Once finalized, the proposed changes would take effect with the September 2017 report.

Once the EEOC has the pay data in hand, enforcement actions are sure to follow. In the meantime, New York and New Jersey employers are advised to review their records to evaluate whether pay disparities arise out of legitimate, non-discriminatory reasons. Failure to engage in such analysis could lead to lawsuits and costly liability.

Employer should also consider submitting comments to the EEOC to express their legitimate concerns. Raw data that appears to reveal possible disparities does not, without more, provide necessary inputs for a nuanced and fair review of those numbers. In the absence of additional questions and a fair attempt to look behind the data, employers may face unfair and expensive governmental onslaughts. Based upon the EEOC’s recent enforcement actions that have, at times, been criticized by the courts, concerns over any rush to judgment by the EEOC and the unfairness of facile reviews and conclusions should be vigorously expressed.

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Author: Gary S. Young

Gary S. Young concentrates his practice on ERISA, employee benefits and executive compensation as a member of Scarinci Hollenbeck’s Corporate Transactions and Business Law Group. Gary began his legal career almost 40 years ago as a traditional labor lawyer, and he continues to provide employment law advice to private sector employers on subjects such as wage & hour compliance, workplace harassment, FMLA, etc

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