In October 2016, we issued a client advisory reporting that the Equal Employment Opportunity Commission had finalized its revisions to the EEO-1 form, requiring for the first time that employers and federal contractors with 100 or more employees include pay data, categorized by gender, race and ethnicity, in their reports. The EEOC also extended the reporting deadline for calendar year 2017 from September 30, 2017, to March 31, 2018. On August 29, 2017, the White House Office of Management and Budget notified the EEOC that it had suspended this new pay data reporting requirement pending further review, with no indication of when a final decision would be made. View the memo here.
The OMB indicated that its stay and review were due, in part, to its concerns that the “continued collection of this [pay data] information is contrary to the standards of the [Paperwork Reduction Act],” and that “some aspects of the revised collection of information lack utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.” Although we believe that the revised EEO-1 form is not likely to survive, we want to remind employers that the issue of “pay equity” is very much alive.
While acting EEOC Chair Victoria Lipnic expressed the agency’s continued commitment to closing the wage gap, it is unlikely that the EEOC’s efforts will include the revised EEO-1 form. Lipnic herself publicly expressed skepticism of the proposed pay data reporting requirement, questioning whether the collection of this data would further the objective of pay equity. At the annual National Industry Liaison Group Conference in early August, Lipnic described the revised EEO-1 form as “the poster child for the kind of regulation that the president campaigned against.”
The U.S. Chamber of Commerce inveighed against the revised form as well, requesting the OMB’s review and rejection of the revised form and publishing the results of the Chamber’s 2016 survey, which showed that the costs of compliance were exponentially higher than those estimated by the EEOC. Additionally, former EEOC Chair Jenny Yang, under whose leadership the EEOC proposed the revised EEO-1 form, will term off of the Commission this month. This means that, once all vacant positions are filled, three of the five Commissioners will be appointed by President Trump.
Despite these developments, employers should not deprioritize their pay equity efforts. Following the OMB’s announcement, Lipnic stated that she considers pay equity to be a “high priority area,” and that EEOC enforcement actions of the Equal Pay Act and Title VII will continue. Private litigants are also filing lawsuits, including high-stakes class actions, challenging employers’ compensation practices. And, perhaps most significantly, a growing number of states and cities are enacting their own laws intended to combat pay disparities impacting women and racial minorities, as well as other protected classes.
Tips and Takeaways
- Employers can, at least for the time being, hold off on compiling the pay data required in Component 2 of the revised EEO-1 form. The EEOC has explicitly advised, “Employers should plan to comply with the earlier approved EEO-1 (Component 1) by the previously set filing date of March 2018.”
- Employers should be aware of the pay-equity-related laws in the states and cities where they operate, and consult with experienced employment counsel familiar with those laws when developing a compliance plan.
- Employers should consider conducting an internal review of their compensation practices. Any review should be conducted in a manner that will preserve the attorney-client privilege in the event of future litigation involving claims of compensation discrimination.
- Employers should also consult with experienced employment counsel when implementing changes to their compensation practices, including when, for whom and how much to adjust compensation, as well as appropriate messaging around any adjustments.