You have no doubt heard that the Equal Employment Opportunity Commission proposes to require employers with 100 or more employees to start submitting compensation data with their annual EEO-1 reports.
The proposal was announced by President Obama in a White House ceremony last week celebrating the seventh anniversary of the Lilly Ledbetter Fair Pay Act. Here’s the scoop.
The proposal could certainly have been worse. The EEOC would require the reporting to occur at the same time that employers already do their EEO-1 reporting (efficient!), proposes the use of W-2 earnings data (efficient and easy!), proposes that the survey will replace rather than supplement the proposed pay survey rule issued by the Office of Federal Contract Compliance Programs that would have applied to federal contractors (only one rule to worry about instead of two!), and proposes to delay the effective date until Fiscal Year 2017 (never do today what you can put off until tomorrow!).
All that having been said, I’m against it. Here’s why.
No. 1: It’s based on dubious science. The concept behind this requirement is the “gender pay gap.” Currently, women make about 79 cents for each dollar that men earn. The gap is even larger for minority women compared with white men. This would be terrible, except that even the government’s own economists admit that they can’t show the gap is due to discrimination. The “pay gap” compares the average pay of all women in the workforce with the average pay of all men in the workforce. It does not control for type of position held, geography, career ambition, family responsibilities, education, type of employer, length of employment, gaps in employment, era in which one entered the workforce, or anything else. Are women paid less because of discrimination? Maybe. I can’t say no. But I can’t say yes, either. At least, not in this day and age. I suspect that these other factors account for the vast majority of the modern gender pay gap, so why blame it on employment discrimination and impose a significant new burden on employers?
No. 2: It’s going to be a pain in the neck. The proposal will require employers to report the number of employees in 12 “pay bands” in each of the 10 EEO-1 categories. Twelve times 10 is 120. A hundred and twenty “bands.” This is going to be a lot of busy work for somebody. (Why do I say “busy work”? Read on.)
No. 3: It’s unlikely to provide the EEOC with genuinely meaningful information about pay discrimination because it doesn’t control for anything other than “pay band” and EEO-1 category. In other words, it is a blunt instrument.
No. 4: AND/OR it will result in lots of baseless charges against employers who have numbers that look bad but really aren’t. Again, this is because the proposed survey is a blunt instrument.
No. 5: Does the EEOC even have the legal authority to impose this requirement? The agency says it has the authority under Section 709(c) of Title VII, which is the authority it uses to require EEO-1 reports in the first place. But is there a difference between the OFCCP’s requiring compensation information from federal contractors (hey, if you don’t like it, don’t do business with the government!) and the EEOC’s requiring it of every employer that has 100 or more employees? If there isn’t a difference, there should be.