Last Wednesday, the Equal Employment Opportunity Commission revised the proposed rule requiring certain employers to collect and report pay data to the federal government. The initial proposed rule, published in late January, required reporting to begin on September 30, 2017. Due to input received during the initial 60-day comment period, the start date for reporting data was moved to March 31, 2018; this change delays reporting until after employers have issued W-2 forms for the previous calendar year.
When President Obama signed the Lilly Ledbetter Fair Pay Act of 2009 into law (his first piece of legislation after taking office), he put all employers on notice that his administration would be significantly focused on equal pay. However, the legislation has not had the impact that the administration — and many experts in the field — expected (according to the EEOC, only 1.1 percent of all EEOC claims last year were equal pay claims). Seven years after the Fair Pay Act, the Obama administration and the EEOC announced that employers would now be required to self-report pay data broken down by various demographics.
This January, the EEOC announced that federal employers and other employers with more than 100 employees will be required to include aggregate pay data and hours worked by gender, race, and ethnicity, as well as by job category. The EEOC and the Office of Federal Contractor Compliance Programs (OFCCP) will use the data to combat pay disparities nationwide and to assess complaints of discrimination, focus agency investigations, and identify pay disparities that will lead to further investigation and citations.
Employers should keep in mind that Wednesday’s announcement does not change their data collection and self-reporting requirements; rather, it merely pushes back the start date to do so. While legitimate factors such as education and experience may explain pay disparities, these factors will not be reported. Therefore, it is crucial that employers are able to defend their compensation structure. Employers should conduct a pay equity analysis now in order to address any potential unexplained pay disparities — before the reporting requirement is triggered. The analysis should be directed by an attorney to maintain privilege and prevent disclosure of the assessment.
For more information on how this may impact your business, please contact a member of the Goldberg Segalla Employment and Labor Practice Group.