On Aug. 8, 2014, the Office of Federal Contract Compliance Programs (“OFCCP”) issued a proposed rule that could require certain U.S. federal government contractors and subcontractors to submit an annual Equal Pay Report on employee compensation. The report would consist of summary data on total W-2 compensation paid to employees by sex, race, ethnicity and specified job categories, as well as other relevant information. The proposed rule would apply to contractors that are required to file an Employer Information Report (EEO-1 Report), have more than 100 employees, and have a contract, subcontract or purchase order of at least $50,000 held for at least 30 days.
Under the proposed rule, federal contractors and subcontractors would have to submit the following required information in the contractor’s EEO-1 Report:
- Total number of workers within a specific EEO-1 job category by race, ethnicity and sex.
- Total W-2 earnings, defined as the total individual W-2 earnings for all workers in the job category by race, ethnicity and sex.
- Total hours worked, defined as the total number of hours worked for all workers in the job category by race, ethnicity and sex.
The OFCCP stated that it would use the information to help focus enforcement efforts on those contractors whose summary data suggests potential pay violations, while simultaneously reducing investigations of those businesses whose information suggests that they are not violating any regulations. In order to facilitate internal review and enable contractors to take appropriate voluntary compliance measures, the OFCCP would annually release aggregate summary data on the race and gender pay gap by industry and EEO-1 category.
The new reporting requirements are part of a larger strategy being implemented by the OFCCP to address the fact that women, particularly minority women, continue to earn less than men. While the OFCCP stated that the cost and impact on businesses would be slight, and that it would essentially lower costs in the long-run, the true cost remains to be seen. After all, this is an OFCCP that has only increased its budget, regulatory oversight and aggressive investigations since 2009.1
The proposed rule has been published online, and public comments will be accepted until Nov. 6, 2014. The OFCCP’s fact sheet on the proposed rule can be found here.