Proposed Rule Would Require Employers to Submit Pay Data

On January 29, 2016, the seventh anniversary of the Lilly Ledbetter Fair Pay Act, President Obama and the U.S. Equal Employment Opportunity Commission (EEOC) announced proposed changes to the EEO-1 Report which all employers with 100 or more employees and federal contractors with 50 or more employees are currently required to file. The current EEO-1 Report requires employers to submit data on the race/ethnicity and sex of their employees within 10 separate job categories such as senior-level officials and managers, professionals, technicians, office and clerical, and craft workers.

As part of its efforts to eliminate the so-called gender pay gap, the EEOC issued a proposed rule that would expand the reporting requirement to include the numbers of employees, broken down by race and sex, in 12 pay bands within each of the 10 job categories. On a separate form, employers would also have to report the number of hours worked by employees by race and sex within each pay band in each job category.  The EEOC believes that the collection of this data will assist EEOC (and employers) to identify areas of potential pay discrimination.  The regulations leave open, for now, the question as to how to collect the information regarding hours worked.  This part of the report could also present some issues regarding the hours worked by salaried employees.

The proposed regulations state that employers would first be required to report this new information by September 30, 2017. Although the proposed regulations call for use of W-2 forms to report earnings, employers would be required to report actual earnings as of the time of filing of the EEO-1 Report in September.  EEOC assumes that because pay information is cumulative, employers (or their payroll vendors) should be able to efficiently generate pay data at that time.

Whenever a federal agency proposes new regulations, the Paperwork Reduction Act requires it to provide an estimate of the burden imposed by the new regulations on the public. As they frequently do, the EEOC provided what appears to be an unreasonably low estimate that the new report will only require an additional 6.6 hours per year for employers to complete.  The regulations are open for comment until April 1, 2016 but this deadline could get pushed back depending upon the volume of comments received.  It can be expected that virtually every group representing employers will submit comments opposing the new reporting requirement and making it clear that the submission of such detailed information will put an onerous burden on employers.

This article is intended to provide general information, not a specific legal opinion or advice. Any particular questions should be directed to your legal counsel. If you do not have legal counsel, please feel free to contact Harmon & Davies attorneys Tom Davies, Esq. or Laura Gallagher, Esq. at 291-2236.

 

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