Here’s What You Need to Know about the EEOC’s Pay-Data Rule
When the White House Office of Management and Budget announced plans to stay the Obama-era pay-data-collection rule in August 2017, few observers were surprised. It was just the latest move by the Trump administration to roll back many of the rules and regulations instituted by his predecessor.
However, employers’ collective sigh of relief was short-lived. In response to a lawsuit filed by the National Women’s Law Center against the OMB, a federal judge reinstated the rule on April 25, requiring the Equal Employment Opportunity Commission to collect pay data—sorted by job category, race, ethnicity and gender—from companies with more than 100 employees.
Previously, employers were required to provide a “headcount report,” broken down by job category, race and gender, explains Brett Coburn, a partner in the labor and employment group of Atlanta-based Alston & Bird. While the revised EEO-1 form “uses the same building blocks,” he says, it also collects total W-2 compensation data and hours worked. The rule is intended to help the EEOC identify instances of pay discrimination, but Coburn is dubious it will do anything but create an administrative burden for employers.
“The data that will be collected is so aggregated and lacking in a lot of critical ways, I don’t know how it’s going to provide useful information to government regulators,” says Coburn. “A company that has been doing EEO reporting for a long time has the headcount stuff under control, but when you start aggregating all the compensation data and hours data, you may need to have two or three or even more different systems communicating with each other to make this happen.”
While the deadline for submitting the data is Sept. 30, the web-based portal through which it will be collected went live on July 15. While employers are now able to begin submitting data, Coburn urges companies not to be in too big of a rush to begin the process, suggesting they wait until mid-September to comply with the requirement to allow time for any kinks to be worked out of the system.
In the meantime, Coburn recommends HR professionals take steps to pull together the requisite data and ensure it can be generated in the appropriate format. And while he’s not completely sold on the idea that the rule will help the EEOC identify instances of pay discrimination, Coburn believes savvy companies will look upon the process as an opportunity to turn the mirror on pay equity in their own organizations and hopefully avoid what he predicts will be the “next big wave” of employment lawsuits.
“This new EEO-1 rule provides an opportunity to HR professionals to start having a robust dialogue about these issues and how to tackle them,” says Coburn. “It’s not an easy thing to fix, but gone are the days when companies could bury their heads in the sand. They need to be proactive and identify issues and start trying to address them.”