March 7, 2019 | HR Compliance | Posted by Bob Greene, Senior HR Industry Analyst at Ascentis
Is the EEO-1 Pay Data Collection Requirement a Go?
Here’s a quick round of “HR Jeopardy:”
Answer: It occurs each year in April, and in 2019, it will be April 2.
Question: What is Equal Pay Day?
Did you win $1,000 for that correct question? Or, perhaps if you’re a female reader, did you only win $779?
The gender pay equity gap is a real thing, and in 2018 it stood at 22.1%. (The average woman earning 22.1% lower wages for the exact same job, controlling for variables like experience and skills as the average man.) A close examination of the change in this gender pay gap over the last 20 years is a classic example of “one step forward, one step back.” And this trend persists, per the Pew Research study cited above, women now compose nearly half the workforce (up from less than 30% of the workforce in 1950) women participants in the workforce are now far more likely to be college-educated than their male counterparts (38% of women vs. 34% of men age 25 to 64 having a baccalaureate degree)!
The New Requirement
Facing this stubbornly unyielding trend in workforce compensation, the Obama Administration took some “baby-steps” to try to address it. Recognizing that “knowledge is power” and unless we can diagnose where wage gaps are more prevalent (industry, geography, perhaps company size), we can’t begin to address those gaps. The DOL under the previous President mandated some future changes to the EEO-1 report. Proposed in 2014 and finalized in 2016, the new requirement would apply to the EEO-1 reporting period of March 2018 and beyond.
The EEO-1 report revision would add the requirement to report employees’ statistical data not just by the traditional race and gender metrics, but also broken down by annual compensation “bands” for employers of 100 employees or more
The motivation behind the mandate was as simple as it was logical: “You can’t fix a problem that you can’t identify with some degree of specificity.”
In August 2017, the new Presidential Administration placed the mandated reporting changes on hold through their Office of Management and Budget (OMB). The EEOC vaguely promised to issue revised regulations that would be less burdensome but achieve the same (or better) goals “soon.” Since then, no new regulations have followed, and a new annual EEO-1 reporting deadline is coming up quickly on May 31. This filing will be reverted to the previous report format – meaning no pay equity data will be included.
In November 2017 the National Women’s Law Center (NWLC), along with other plaintiffs, sued the OMB to rescind the agency’s set-aside of the new regulations, with the intent to reinstate them. And on March 5, 2019 the NWLC won its lawsuit!
The DC District Court Weighs in
On summary judgment, the D.C. federal district court found:
- The stay of the new reporting requirements was arbitrary and capricious on the part of the OMB
- The OMB failed to follow its own rules in issuing the stay
- The OMB failed to provide the “reasoned explanation” for the stay, as required under applicable federal rules
It is likely that this decision will be appealed to the D.C. Court of Appeals. Even on expedited review, this could take a while, with the 2019 reporting deadline looming just 85 days away at the time of this writing. Pending that appeal, it appears the only alternative the OMB or EEOC is armed with to address the rampant confusion this decision will cause in the employer community, will be to delay the 2019 submission deadline from May 31 to a future date.
What’s an Employer To Do?
First and foremost, this is a crucial time to stay informed of the latest legal and regulatory developments on this topic. Set alerts in your favorite search engine with all the needed keywords. Subscribe to news feeds. Organizations like SHRM and WorldatWork will continue to report on this issue.
But getting more to the root of the issue, ensuring that you have a good pay-for-performance and non-gender skewed compensation program in place will be key as well. The #MeToo movement has resulted, as a “side-effect,” in scrutiny on not just anti-sexual harassment policies, but on collateral gender-oriented issues as well. Pay transparency laws and candidate salary history bans are but two examples of these issues, and the states are passing them fast and furiously. States are increasing their focus on core gender pay equity as well – New Jersey passed one of the most dramatic and comprehensive pay equity laws in the nation last year (the Diane B. Allen Equal Pay Act of 2018), as anyone who does certain kinds of business with the state undoubtedly already knows.
Bob Greene currently serves as Senior HR Industry Analyst at Ascentis. Bob’s 40 years in the human capital management industry have been spent in practitioner, consultant and vendor/partner roles. As practitioner, he managed payroll for a 5,000-person bank in New Jersey. As consultant, he spent 8 years advising customers in HRMS, and payroll and benefits system design as well as acquisition strategies. Bob also built a strategic HCM advisory practice for Xcelicor (later acquired by Deloitte Consulting.)