The US Equal Employment Opportunity Commission (EEOC) recently released proposed changes to federal form EEO-1, with a request for public comment by April 1, 2016.  These changes, if approved by the Office of Management and Budget (OMB), will require federal contractors and all other private employers with 100 or more employees to report data on employees’ earnings and hours worked in their annual EEO-1 reports. 

The EEOC plans to collect and use wage data to identify and combat wage discrimination as part of its and the Office of Federal Contract Compliance’s (OFCCP) efforts to address the continued existence of wage disparities based on gender, race, and ethnicity that limit equal pay and equal opportunities across industries for women and workers of color.  For a limited time, employers can provide comments and request to participate in a public hearing on the proposed changes; however, all indications are that the OMB will ultimately approve the EEOC’s proposal. 

What This Means for Employers

If the OMB approves the proposed changes, affected employers will be required to annually report their employees’ wages indicating ethnicity, national origin, and gender for each job category.  Think of the revised EEO-1 report as a roadmap identifying wage disparities that may exist within your workplace that correlate with race or gender, regardless of the business reasons for the differences.  Your company will be required to give this information, without the opportunity to provide any explanation, to the EEOC – the federal agency responsible for investigating and taking action to correct wage discrimination under the civil rights laws, where based on race, national origin, or gender.

Assessing and Managing Your Company’s Exposure

Though the changes will not become effective until 2017, and the first revised EEO-1 will not be due until September 30 of that year, now is the time to take action.  Even the most conscientious employers should take advantage of the built-in lead time by using the proposed revised EEO-1 form to conduct mock assessments of their potential reporting by location.  Any internal assessment or other analysis of employee wage data should be conducted with the active involvement of counsel, under attorney-client privilege.

Mock assessments will help employers identify potential areas of concern and provide sufficient time to make any appropriate adjustments before the data collection and reporting requirements go into effect. 

Potential Pitfalls for the Unwary

Employers who take a “wait and see” approach may expose themselves to potential liability under Title VII, the Equal Pay Act, and other state and federal laws.  The EEOC has clearly communicated that it intends to use reported data to identify potential wage discrimination claims and the agency possesses the authority to initiate an investigation of potential claims.  In other words, the EEOC does not need to wait for an employee to file a charge; rather, it can initiate and investigate a commissioner’s charge against an employer.  Those charges can be particularly burdensome and costly for employers to defend as the EEOC tends to pursue them aggressively.

In addition, EEO-1 data is subject to public disclosure and scrutiny.  The media frequently submit Freedom of Information Act (FOIA) requests for EEO-1 data.  Additionally, plaintiffs’ lawyers routinely tell employers to produce their EEO-1 reports in discrimination litigation. 

Notably, the law requires the EEOC to refrain from disclosing EEO-1 data unless the FOIA request is accompanied by a copy of a court complaint, indicating that a charging party has filed suit against the employer.  However, the EEOC is not the only federal agency with access to EEO-1 data.  The OFCCP also collects and maintains EEO-1 data in its files.  Unlike the EEOC, the OFCCP is not required to limit public disclosure of EEO-1 data.  As a matter of practice, the OFCCP has said that it will hold contractor data confidential “to the maximum extent permitted by law.”  However, federal contractors cannot count on those vague assurances to protect their EEO-1 data from public disclosure because no law, regulation, or policy prohibits the OFCCP from disclosing the data.  At the end of the day, regardless of the OFCCP’s assurances and past practices, a federal contractor’s EEO-1 data is absolutely susceptible to public disclosure and scrutiny, without restriction.

Employers should not wait for these issues to arise in their workplace.  Instead, employers should work with counsel to take steps now to prepare.  You still have time to ensure that your 2017 EEO-1 report will not give the government, the media, or the general public ammunition to make an example of your company.