On September 29, 2016, the U.S. Equal Employment Opportunity Commission (“EEOC”) announced it has finalized a regulation to collect summary employee pay data from certain employers. The new regulation will require thousands of businesses to disclose more information about employee compensation in an effort to better combat pay discrimination. The summary pay data will be added to the annual Employer Information Report, or EEO-1 report, that is coordinated by the EEOC and the Department of Labor’s Office of Federal Contract Compliance Programs.
First introduced in January 2016, the new regulation requires all businesses with 100 or more workers to submit pay data by gender, race, and ethnicity on their EEO-1 report. Currently, the EEO-1 report only collects data about race, gender, and job category. The revised form will require private employers to also include summary pay data. Businesses will also have to report the number of hours worked by employees.
Because of lack of transparency, pay discrimination often goes undetected. The EEOC hopes the information will help to improve the enforcement agencies’ investigations and prevent pay discrimination. The EEOC also addressed concerns about the potential burden this may place on businesses, noting that the measure of wages is information the employers already have and further, employers should already be familiar with the EEO-1 form.
The regulation is expected to cover 60,000 employers and 63 million employees. The impact on U.S. operations will be significant, as data collection and reporting burdens will increase. Additionally, opponents predict the regulation may subject employers to investigations that are not merited and even result in the increase of EEOC-led class action lawsuits. In order to prepare for the March 31, 2018 reporting deadline, businesses should take steps now to ensure the company will be in compliance with the EEO-1 filing requirements and additionally it may be prudent to begin conducting proactive evaluations of compensation programs to ensure compliance with pay equity laws.
The EEOC has made available supporting materials, recordings of informational webinars, and sample forms here.