Recently, the Equal Employment Opportunity Commission (“EEOC”) has sent mixed signals to employers regarding its efforts to collect salary and pay data to combat pay inequity based on gender and race. Many employers are left wondering what, if anything, they may be required to do after the most recent developments.
Under a longstanding rule, employers with over 100 employees currently must submit an “EEO-1 Form” reporting the demographics of their workforce. During the last year of the Obama Administration, the EEOC proposed a revision that would require these employers to include wages and hours worked for all of their employees, in addition to the demographic information previously required. This new required section of the form has been referred to as “Component 2.” Employers would be permitted to group employees into broad job categories for purposes of Component 2, and then subdivide those categories into twelve pay bands. After a public hearing and a comment period, the EEOC finalized the changes in October 2016, requiring covered employers to file the new EEO-1 reports by the end of March 2018.
Last week, the Office of Management and Budget (“OMB”) informed the EEOC that it was instituting a review and immediate stay of “Component 2.” Businesses and industry groups applauded the move—groups such as the Chamber of Commerce had previously panned the changes as a burdensome and costly government overreach. OMB seemed to accept these arguments, stating in its memorandum to the EEOC that “[a]mong other things, OMB is concerned that some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.” Accordingly, businesses may use the previously approved EEO-1 Form to report only demographic data for their employees, not wage and hour data.
Shortly thereafter, EEOC Chair Victoria Lipnic recommitted the EEOC to combatting pay discrimination and inequity based on race and gender. In an interview, Lipnic reminded employers that Component 1 of the EEO-1 Form remains in effect. Additionally, Lipnic made clear she would work closely with OMB to address its concerns. This statement could be an indication that OMB and the EEOC will revise Component 2 instead of discarding it altogether. Finally, Lipnic insisted that the EEOC still considered pay discrimination a top enforcement priority.
OMB’s stay of the new data collection requirements has many employers wondering: what now? First, employers should continue working towards achieving pay equity and eliminating disparities in wages that could be considered discriminatory in an enforcement action by the EEOC. Additionally, employers should aim to work toward this goal because while the changes to the EEO-1 Form are stayed, OMB and the EEOC may reissue a similar, albeit hopefully less burdensome, rule requiring disclosure of pay data. We will continue to provide updates as EEOC issues guidance on pay disparity and data collection, as Chair Lipnic has made clear it will remain an agency priority going forward.