Companies should consider examining the extent to which there may be pay disparities in their workforce. Current events and the EEOC’s revised EEO-1 Rule suggests that all regulatory agencies will be taking a much closer look at corporate pay practices in an attempt to try and root out unintentional bias that is identifiable through inexplicable differences in pay between men and women (as well as between other protected categories).
Equal pay discussions coinciding with and reacting to the Lilly Ledbetter Fair Pay Act have gained traction since the Act was signed into law almost 8 years ago. The goal of equal pay has not only been the recent focus of several members of the U.S. Women’s National Soccer Team, but it also is a stated enforcement priority of the EEOC.
To work toward that enforcement priority, the EEOC recently announced that the Employer Information Report (“EEO-1”) will now be utilized as tool to examine pay disparity. The requirement that certain large employers complete the EEO-1 is not a new one. Currently, the survey categorizes a company’s employment data by race/ethnicity, gender, and job category. But the revised EEO-1 Rule would require employers to submit employee wage and hour data with the EEO-1 report.
The EEOC has said the following regarding its use of information submitted via EEO-1 Reports:
The proposed pay data collection will provide a much needed tool to identify discriminatory pay practices where they exist in order to ensure that fair pay practices are put in place . . . and identify existing pay disparities that may warrant further examination.
If an employer fails to submit an EEO-1, the EEOC may obtain an order from the United States District Court compelling the employer to submit the report. If a federal contractor or subcontractor fails to comply, the federal government contract may be terminated and the contractor or subcontractor may be barred from future federal contracts. The EEO-1 will also be used by the Office of Federal Contract Compliance (OFCCP) as a data collection tool for purposes of evaluating compliance with various affirmative action obligations of federal contractors.
The revised EEO-1 Rule changes the reporting date from September 30 to March 31, and alters the timeframe during which the employer may chose its workforce included on the EEO-1 Report. That timeframe will now span from October 1 to December 31 rather than July 1 through September 30.
Take Away for Employers
As shown by the revised EEO-1 Rule, the EEOC is looking to find and address discriminatory pay practices. Employers should consider whether their own pay policies and practices would catch further attention from the EEOC and remedy concerns before wage and hour reports are mandatory.