March 2018 - White House Suspends Pay - Data Reporting on Revised EEO-1 Form
An opportunity to address better ways to address pay discrimination.
The White House Office of Management and Budget (OMB) plans to stay the effective date of the pay-data collection provisions of the revised EEO-1 form in order to review the appropriateness of the revisions under the Paperwork Reduction Act (PRA).
Victoria Lipnic, acting chair of the U.S. Equal Employment Opportunity Commission (EEOC),announced on Aug. 29 that she had been notified of the suspension. "The EEOC remains committed to strong enforcement of our federal equal pay laws," Lipnic said. She expressed the hope that "this decision will prompt a discussion of other more effective solutions to encourage employers to review their compensation practices to ensure equal pay and close the wage gap."
The revised EEO-1 form would have gone into effect March 31, 2018, and would have required employers with 100 or more employees to report W-2 wage information and total hours worked for all employees by race, ethnicity and sex within 12 proposed pay bands.
"Existing EEO-1 obligations have not changed, but employers will not need to report on wages or hours worked," said Nancy Hammer, senior government affairs policy counsel for the Society for Human Resource Management (SHRM). "We expect that EEOC will take further actions on this issue."
[SHRM members-only HR Q&A: Can you please explain the filing requirements for the EEO-1 form?]
March 31 Filing Deadline
In anticipation of the expanded pay-data reporting requirements, the EEO-1 filing deadline of Sept. 30, 2017, was moved to March 31, 2018 (with reports to be due on March 31 every subsequent year). The EEOC said that it will leave the March 31 EEO-1 reporting deadline in place.
An Unnecessary Burden
Last year, SHRM member Janese Murray testified before the EEOC against the requirement. "Collecting pay data in the highly aggregated manner proposed will not help identify unlawful pay discrimination," said Murray, vice president of diversity and inclusion at Exelon Corp., aFortune 150 energy firm based in Chicago that employs about 30,000 people. Over time, she noted, pay is increasingly influenced by an employee's chosen career path—previous jobs, experience, education, performance and geographic locations, along with level of responsibility.
Pay for employees holding positions within the same broad EEO-1 job category also "varies significantly because these individuals perform very different work, she said. "However, there is no way for the EEOC to understand this legitimate reason for pay differences within this job category under the proposed data collection."
Murray also said that relying on W-2 income data would provide a faulty picture. "W-2 gross income includes other nondiscriminatory variables that may impact pay, including shift differentials, bonuses, commissions and overtime compensation," she explained. "While this data may provide the agency a broader view of pay practices, collecting this data will not allow the EEOC to evaluate comparable compensation data points."
SHRM also submitted comments on the proposal to the EEOC, and again to the OMB's Office of Information and Regulatory Affairs (OIRA), arguing, among other things, that the EEOC proposal did not satisfy PRA requirements. The PRA states that data collection must minimize the burden on those individuals and entities most adversely affected and must maximize the public benefit from information collected.
More recently, SHRM member Lisa Ponder, SHRM-SCP, vice president and global HR director MWH Constructors Inc. in Broomfield, Colo., raised employer concerns in testimony before the House Subcommittee on Workforce Protection. "There is no way to show the experience or responsibility levels that dictate an individual's compensation in the EEO-1 report," she said.
Advocates Criticize Move
Pay equity advocates who had supported expanded pay-data reporting were sharply critical of the suspension. "We see through the Trump administration's call to halt the equal pay rule that requires employers to collect and submit pay data by gender, race, and ethnicity to the government," said Fatima Goss Graves, president and CEO of the National Women's Law Center in Washington, D.C. "Make no mistake—it's an all-out attack on equal pay. [It] sends a clear message to employers: if you want to ignore pay inequities and sweep them under the rug, this administration has your back."
Requiring equal-pay data collection would "encourage companies to identify and correct pay disparities and allow the EEOC to more effectively and efficiently root out and address pay discrimination," the center argued.
[SHRM members-only toolkit: Managing Pay Equity]
Addressing Pay Inequity
In July, SHRM wrote to the new administrator of OIRA, urging that the agency exercise its independent authority to reconsider the revised EEO-1 form. SHRM's letter, along with others from the employer community, led OIRA to take a closer look at the validity of collecting pay data.
"OIRA's decision to review pay-data collection prevents employers from having to invest in costly changes to their HRIS [human resource information systems] and payroll systems," Hammer said. "It also gives EEOC the opportunity to consider better ways to address pay discrimination. SHRM will continue to work with EEOC and other government agencies to address this important issue."
By: Stephen Miller, CEBS Aug 31,2017