On February 1, the Equal Employment Opportunity Commission issued a proposal that would require employers with 100 or more employees to begin submitting compensation data with their annual EEO-1 reports.
After receiving comments on its February proposal, the EEOC issued today a new proposal, which has tweaks to the February proposal but no major changes. Comments on the new proposal (which I’ll call the “July proposal”) will be accepted through August 15. Instructions for submitting comments online, by email, by fax, or by “snail mail” are included on the first page of the proposed rule.
Here’s the quick and dirty:
- Timetable. For 2016, employers would submit their EEO-1 information just like in years past. But in 2017, the timetable would change. The “snapshot” period for which the employer has to provide information for a selected pay period would change to October 1-December 31. And the actual EEO-1 reporting for 2017 — including the newly to-be-required compensation data — would have to be provided by March 31, 2018. The new time periods were proposed to ease the burden for employers by allowing the compensation reporting to coincide with tax reporting deadlines. (The EEOC proposes requiring employers to use “W2” income information, so having the EEO-1 deadline mesh with IRS deadlines makes sense.)
- Pay bands. Beginning March 31, 2018, and every year afterward, employers would have to report the number of employees it had during the snapshot period by race, ethnicity, and gender in each of 12 pay bands. The compensation itself would be for the entire calendar year for those employees.
- ”Hours worked.” Employers would also have to report “hours worked” for these employees. “Hours worked” for employees who are exempt under the Fair Labor Standards Act can be a “proxy” of 40 hours a week if they’re full time or 20 hours a week if they’re part time — or, if the employer has actual time records for exempt employees, the employer can choose to use actual hours worked instead. “Hours worked” for non-exempt employees would be the same as their “hours worked” for FLSA purposes, which would include overtime hours.
- Purpose. The EEOC says it plans to use the compensation information to assess claims of pay discrimination and, as always, will give the employer the opportunity to explain any apparent disparities before making a determination. The Agency says it will also periodically publish reports on pay disparities and discrimination using the data in aggregated form.
- Confidentiality. One major employer concern with providing this data to the U.S. government is confidentiality. Not to worry, the EEOC says — because Title VII makes it a misdemeanor for information to be disclosed before there is a “proceeding” involving that information. (It’s true!):
(e) Prohibited disclosures; penalties
It shall be unlawful for any officer or employee of the Commission to make public in any manner whatever any information obtained by the Commission pursuant to its authority under this section prior to the institution of any proceeding under this subchapter involving such information. Any officer or employee of the Commission who shall make public in any manner whatever any information in violation of this subsection shall be guilty, of a misdemeanor and upon conviction thereof, shall be fined not more than $1,000, or imprisoned not more than one year.
The EEOC says that “proceeding” means an actual lawsuit based on the information provided by the employer. The Agency also says that it will not share the compensation information with other federal agencies or law enforcement unless they enter into a Memorandum of Understanding and agree to comply with the Title VII non-disclosure requirement. The EEOC will not share the information with state fair employment practices agencies unless the state agencies agree not to make the information public.
If the employer is a federal contractor, the information may be disclosed by the Office of Federal Contract Compliance Programs pursuant to the Freedom of Information Act, but the OFCCP will first give the contractor a chance to object. If the contractor’s objection is well founded (in the opinion of the OFCCP), then the OFCCP will not disclose the information. If the OFCCP gets a FOIA request relating to an employer that is not a federal contractor, then the EEOC’s strict non-disclosure rule applies. The EEOC specifically says in the proposed rule that it will deny any request for “disaggregated” information about an employer who is not a federal contractor. (“Aggregated” information — that is, information about multiple employers — can be disclosed.)
- What has not changed. Most of the EEOC’s original February proposal remains in place. (1) The proposed requirement is still based on dubious science — the July proposal cites to an “equal pay” study purporting to show that more than 35 percent of the gender pay gap “may” be a result of discrimination. There are no references to the studies that show otherwise. (2) As already noted, despite the entreaties of employers and their advocates, the EEOC plans to require comp information based on W2 income rather than pay rates. W2 income includes everything – regular pay, bonuses, overtime premiums, everything. (3) The EEOC has rejected requests to limit the compensation reporting requirement to employers of 500 or more employees. (4) Despite the EEOC’s minor changes, this reporting requirement is going to be a major pain for employers.
In other words, Harrumph. I still don’t like it.