Why it matters

On the anniversary of the Lilly Ledbetter Fair Pay Act, President Barack Obama announced that the Equal Employment Opportunity Commission (EEOC) will further the push for equal pay by requiring employers to report pay data. "More than 50 years after pay discrimination became illegal it remains a persistent problem for too many Americans," EEOC Chair Jenny R. Yang said in a statement. "Collecting pay data is a significant step forward in addressing discriminatory pay practices. This information will assist employers in evaluating their pay practices to prevent pay discrimination and strengthen enforcement of our federal anti-discrimination laws." In addition to data about race, ethnicity, sex, and job category of employees already provided in the Employer Information Report (EEO-1), the EEOC proposed to add data on pay range. Beginning with the September 2017 annual report, employers with more than 100 employees would be required to identify employees' total W-2 earnings for a 12-month period looking back within the pay bands established by the Bureau of Labor. The new EEO-1 requirement—currently open for public comment—certainly adds to employers' reporting duties but could also lead to litigation or enforcement actions from the agency, with Secretary of Labor Thomas E. Perez calling the data collection "a more powerful tool" for the government to perform its enforcement work and "root out discrimination where it does exist."

Detailed discussion

Continuing his push for equal pay, President Barack Obama celebrated the seventh anniversary of the Lilly Ledbetter Fair Pay Act—the first piece of legislation he signed into law—with a renewed commitment to equal pay. At his direction, the Equal Employment Opportunity Commission (EEOC) proposed a revision to the Employer Information Report (EEO-1) that would require employers to report information about the wages paid to their workers.

Each year, private employers with at least 100 employees (and federal contractors with 50-99 workers) are currently required to file an EEO-1 report, sharing the number of individuals they employ by job category and by race, ethnicity, and sex. The report—delivered to the EEOC and the Department of Labor's Office of Federal Contract Compliance Programs (OFCCP)—contains seven race and ethnicity groups and ten job categories, ranging from Executive/Senior Level Officials to Service Workers.

Pursuant to the proposed revision, both federal contractors with 50-99 workers and private employers with 100 or more employees would additionally submit pay data as of the September 30, 2017, filing deadline. Specifically, employers would share employees' total W-2 earnings for a 12-month period, looking back for the period between July 1 and September 30.

Using W-2 earnings makes sense because the statements include wages and salaries as well as other compensation information—commissions, tips, taxable fringe benefits, and bonuses—the EEOC explained. This method would also account for part-time workers, employees that worked for less than a full 12 months, and those with W-2s from multiple employers, the agency added.

Within the ten EEO-1 job categories, the proposal would have 12 pay bands, starting at $19,239 and under and working up to $208,000 and over. So an employer would report that it employs ten African-American men who are Craft Workers in the second pay band ($19,240 to $24,439), for example.

Although the agency considered other options for reporting pay data—including reporting it at the individual employee level—the EEOC opted to use pay bands, which it said would allow it to compute within-job-category variation, across-job-category variation, and overall variation, which would help the agency discern potential discrimination while still preserving confidentiality.

The collection of pay data will serve a twofold purpose, the agency explained. The data could help employers evaluate their own pay practices to prevent pay discrimination and will also be used by the federal government to combat the problem.

"We can't know what we don't know," Secretary of Labor Thomas E. Perez said in a statement. "We can't deliver on the promise of equal pay unless we have the best, most comprehensive information about what people earn."

Data collected from the proposed revisions to the EEO-1 will be used "to more effectively focus investigations, assess complaints of discrimination, and identify existing pay disparities that may warrant further examination," EEOC Chair Jenny R. Yang noted.

The federal government isn't alone in its focus on equal pay. States have also jumped on the bandwagon, with California and New York recently enacting equal pay laws.

To read the proposed revision to the EEO-1, click here.

To read the EEOC's Questions and Answers document about the proposed changes, click here.