Yesterday, the White House Office of Management and Budget (OMB) issued an immediate stay of a rule that would have required private employers with more than 100 employees to report how much they pay employees by race, ethnicity and gender on their EEO-1 reports.
“It’s enormously burdensome,” Neomi Rao, Administrator of the Office of Information and Regulatory Affairs, told the Wall Street Journal (subscription required). “We don’t believe it would actually help us gather information about wage and employment discrimination.” The administration was also concerned about the practical utility of the pay data reporting requirement as well as privacy and confidentiality issues, said Rao.
Ivanka Trump, the president’s daughter and an assistant to the president, also released a statement on the stay of the pay data rule:
“Ultimately, while I believe the intention was good and agree that pay transparency is important, the proposed policy would not yield the intended results. We look forward to continuing to work with [the] EEOC, OMB, Congress and all relevant stakeholders on robust policies aimed at eliminating the gender wage gap.”
What Was the EEO-1 Pay Data Rule
Last year, the Equal Employment Opportunity Commission (EEOC) announced that it would begin collecting pay data from large employers, including aggregate information from employee W-2s. Employers were given approximately 18 months to prepare for this change with a deadline of March 31, 2018, to first provide pay data.
The stated purpose of the pay data collection was to assist the EEOC in identifying pay disparities that warrant investigation into potential discriminatory pay practices.
Under the now-stayed rule, private employers with 100 or more employees would have been required to provide summary pay data by job category and sex, ethnicity and race using twelve different “pay bands” or salary ranges identified on the EEO-1. To choose the correct pay band, the employer would refer to the employee W-2 earnings.
What Happens Now
Many in the business community raised concerns about this new reporting requirement. During the rulemaking period, CalChamber submitted comments voicing several concerns about the proposed pay data reporting requirement.
The announcement that the rule is halted is an enormous break for employers.
According to a statement issued by Victoria Lipnic, Acting Chair of the EEOC, employers should continue complying with the earlier version of the EEO-1 form that collects data on race, ethnicity and gender by occupational category. These sections of the EEO-1 report have been around for decades. However, employers will not be required to provide pay data.
The 2017 EEO-1 report is still due on March 31, 2018. The 2017 EEO-1 reporting instructions found on the EEOC’s website are currently being updated.
The stay of the pay data requirement will remain in effect while the OMB and the EEOC conduct a review. In addition, Lipnic wrote that the EEOC will continue to remain “committed to strong enforcement of our equal pay laws.”
The issue of fair pay continues to be a focus at both the state and federal levels.