In conjunction with the Obama Administration’s commemoration of the seventh anniversary of the Lilly Ledbetter Fair Pay Act on January 29, 2016, the U.S. Equal Employment Opportunity Commission (EEOC) announced plans to collect pay data from federal contractors and other large employers. Federal Contractors with 50 or more employees and employers with 100 or more employees currently are required to file Employer Information Reports (“EEO-1 reports”) disclosing the number of employees working for them by race, ethnicity, gender, and job category. In an effort to combat potential discriminatory pay practices, the proposal would require employers with more than 100 employees, including federal contractors, to begin including aggregate data on pay ranges and hours worked by employees on their EEO-1 reports beginning in September 2017.

The EEOC, along with the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), would use the pay data to analyze discrimination complaints and focus agency investigations to identify pay disparities that may warrant more scrutiny. The EEOC also would compile and publish aggregated pay data which would allow employers to analyze their own pay practices.

The EEOC’s proposal raises a number of concerns for employers, including that the proposed changes:

  • May impose an added administrative burden on employers and increase compliance costs.
  • Potentially expose employers to unwarranted scrutiny because the aggregate pay data may lack the context to make it meaningful, such as subjective factors that affect pay like seniority, education levels, and performance.
  • May affect an employer’s ability to protect confidential compensation information from competitors.

The proposed changes are available for inspection on the Federal Register website (link below) and the public has until April 1, 2016, to submit comments on the EEOC’s proposal.

Federal Contractors and other employees affected by the proposed changes should:

  • Monitor the developments on the proposed changes.
  • Consider submitting public comments on the proposal.
  • Consider taking proactive measures, such as conducting a self-audit, to identify and address any potentially problematic pay disparities.