Large Employers Should Prepare for Increased Transparency in Pay Practices as the EEOC Looks to Expand Pay Data Collection

On January 29, 2016, in an effort to combat pay discrimination in the workplace, the Equal Employment Opportunity Commission (EEOC) proposed a rule that would require businesses with 100 or more workers to include additional data on a revised version of the annual Employer Information Report (EEO-1). In addition to the demographic information already provided via these forms, employers now must report data on workers’ pay ranges and hours.

This proposed revision to the EEO-1 quickly garnered concern from individuals of the public during the initial comment period. Many expressed apprehension regarding the potential burden that such a practice would place upon them. In response, the agency announced via its revised proposal that the due date for the EEO-1 will now be March 31, 2018, rather than September 30, 2017. This will allow employers to use existing W-2 pay reports in order to complete the form. The comment period for this updated version of the rule will run until August 15, 2016.

U.S. Secretary of Labor Thomas E. Perez made it clear that the revision to the form and the need for such information in order to enforce equal pay standards is imperative and that, “better data means better policy and less pay disparity.” However, many individuals still question the utility of this “better data,” as well as the potential confidentiality issues that may arise.

Due to the EEOC’s strong incentive to detect disparities and enforce equal pay standards, it will not likely further revise the rule-employers should still expect to comply with the agency’s mission for increased transparency in pay practices via submitting additional detailed data. In order to avoid scrutiny, it would be wise for employers to review their pay practices and detect any discrepancies, as well as explanations for such disparities, prior to the EEO-1’s March 31, 2018, due date.