EEOC Issues Proposed Rule Requiring Employers to Disclose Compensation Data

On February 1, 2016, the Equal Employment Opportunity Commission (EEOC), in conjunction with the Department of Labor, issued its Proposed Revision of the Employer Information Report (EEO-1) and Comment Request. The proposal would add data on pay ranges and hours worked to the information collected from the employer information reports beginning with the September 2017 report. The proposal follows President Obama’s announced executive action requiring employers to make additional disclosures regarding employee pay data.

If implemented, the proposal will revise the existing Employer Information Report (EEO-1) to require filers with 100 or more employees to submit employee compensation data in annual filings. The new EEO-1 report would include summary data on compensation broken down by sex, race, ethnicity, job categories, and other data points such as pay ranges and hours worked. It is estimated that the proposal would cover more than 63 million employees.

The EEOC stated that the proposed requirements would allow it to collect the data necessary to combat pay inequality and strengthen enforcement of federal anti-discrimination laws, such as the Equal Pay Act of 1963 and the Civil Rights Act of 1964. According to the EEOC, the compensation information would be used to “assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.” Critics of the proposal contend, however, that the revised reports are burdensome, increase liability risks by exposing employers to allegations of improper pay practices, and raise confidentiality concerns.

President Obama’s announcement coincided with the seventh anniversary of the enactment of the Lilly Ledbetter Fair Pay Act, which makes it easier for employees to file complaints of pay discrimination, and represents the latest step taken by the administration to advance pay equity and transparency. We previously covered other executive actions addressing these issues, including the Fair Pay and Safe Workplaces and Non-Retaliation for Disclosure of Compensation Information orders.

Not to be surpassed, state legislatures have joined the trend and have taken similar actions. Numerous states have adopted some form of anti-wage secrecy legislation, and California and New York both recently passed legislation aimed at eliminating pay discrimination and closing the gender wage gap. See our client briefings, New York Legislative Update: New Employment Protections for Women, California Set to Enact Aggressive Equal Pay Legislation, and Connecticut Enacts “Pay Equity and Fairness” Act—Expanding List of States with Pay Transparency Legislation.

The proposed changes are currently available for review in the Federal Register. Interested members of the public may submit comments on the proposal until April 1, 2016. A public hearing concerning the proposed changes to the EEO-1 report will also be held at a place and time to be announced. To request an opportunity to present views orally at the hearing, interested parties must submit a written request to the EEOC’s Executive Secretariat no later than February 22, 2016.