EEOC’s Proposed Pay Disclosure Rule Will Impact Larger Contractors

On January 29, the U.S. Equal Employment Opportunity Commission announced a proposed modification to its Employer Information Report (EEO-1) form that will impact employers—including federal government contractors—with 100 employees or more.

Under the proposed modification, beginning in September 2017, these employers will be required to report their employees’ pay ranges and hours worked, broken down by the gender and race/ethnicity of employees. Contractors with 50 to 99 employers, who must also complete EEO-1s, would be exempt from the new requirement.

Individual employee reporting is not required under this proposed modification. Instead, a contractor would have to count and report the number of, say, African-American women it employs as professionals in each of 12 defined pay bands. For this pay determination, the proposed modification envisions that employers would use the employees’ W-2 earnings. The employer would then repeat the process for the other gender and race/ethnicity classifications.

Less definite under the proposed modification is how employers would report the hours its employees work. One approach offered by the EEOC is for employers to use an estimate of 40 hours per week for full-time salaried workers. The EEOC is concerned about the burden imposed by the requirement to report hours, however, as it does not envision requiring employers to start collecting additional data on hours worked that it does not already maintain. But this concern is lessened by the EEOC’s belief that many payroll systems track total hours worked by employees. The EEOC encourages public comment on this issue.

According to the EEOC, the collection of this information will provide the government with insight into pay disparities and will also help strengthen federal efforts to combat wage discrimination. Aggregated pay data will be compiled and published by the EEOC so that employers can analyze their own practices to ensure compliance with federal law. The EEOC, for its part, could use this data as part of their investigations into complaints of discrimination and, according to the EEOC, “identify existing pay disparities that may warrant further examination.”

The EEOC is accepting public comments on this proposed modification until April 1 (interested persons can submit comments here). Should the current proposal become a final rule, employers—including federal contractors—will be required to provide this information beginning in September 2017.

We will keep you posted on the progress of this proposed rule.

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