EEOC to Require Larger Employers to Disclose Pay Data

Last week in commemoration of the anniversary of the Lily Ledbetter Fair Pay Act the Equal Employment Opportunity Commission (EEOC) issued proposed regulations seeking to require employers with 100+ employees to disclose pay data on their EEO-1 reports.  While not all anniversary gifts are created equal (or wanted), this one given to businesses by the federal government seeks to pressure larger employers into examining their compensation practices and adjusting them to mitigate pay disparities in the workplace among genders.

The goal seems to be twofold: one, to disclose pay data which could be used as a basis for federal equal pay lawsuits against companies; and two, to force larger companies to confront internal pay disparities that might systemically exist within the organization.  This move is only the most recent in a line of Executive Orders and legislation over the past seven years seeking to narrow the pay gap between men and women.  More particularly the move seems focused on narrowing the gap between minority women and males, as statistics seem to indicate that minority women are significantly underpaid compared to their male counter-parts versus the smaller gap between Caucasian women and their male counter-parts (particularly in metropolitan areas). Although the gender pay gap has shrunk across-the-board considerably over the past 35 years there still seems to be a statistical differential in pay between genders, particularly once working women have children.

So, aside from increased potential for lawsuits and government action what would this new requirement mean for employers, assuming it is implemented as-proposed?  Mainly, beginning with the 2017 EEO-1 report, reporting employers will need to disclose wage ranges for job classifications similar to how they report race, ethnicity and gender.  Specific data on individual employees will not be required, but compensation will be for each classification.  It also means that employers will need to confront wage disparities on an annual basis and essentially disclose this information (and potential disparity) to the federal agency that could then bring enforcement action against them for the disparity.

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