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On March 4, the United States District Court for the District of Columbia ruled that the Obama-era pay data reporting requirement be immediately reinstated. The requirement was originally slated to come into effect this month, but it was blocked by the Trump administration in 2017.
The recent federal ruling comes after a coalition of organizations including the National Women’s Law Center, Democracy Forward, and the Labor Council for Latin American Advancement, filed an action challenging the stay of the Equal Employment Opportunity Commission’s collection of pay data.
Here’s what you need to know about the pay data requirements.
Employers with 100 or more employees and federal contractors/sub-contractors with 50 or more employees are required to report workforce demographic data including sex, race, and ethnicity by job category to the EEOC. This data is submitted through a form called the EEO-1.
In 2016, the Obama administration changed the reporting requirement with a new pay data collection initiative passed through the Office of Management and Budget. Under the initiative, large employers would also be required to provide the EEOC with pay data by race, national origin and sex and job category.
These revisions include data on wages and hours worked from subject employers and federal contractors/subcontractors. As part of the initiative, the EEOC would continue to use the previously approved EEO-1 form to collect the data on race/ethnicity and gender.
An estimated 63 million employees will be covered under the new initiative. It is meant to help focus public enforcement of equal pay laws and provide better insight into discriminatory pay practices across industries and occupations.
In 2017, the Trump administration blocked the equal pay data collection initiative. According to a statement released by the OMB office, the decision was based on the Paperwork Reduction Act of 1980 which was designed to reduce the total amount of paperwork burden the federal government imposes on private businesses and citizens.
“OMB has also decided to stay immediately the effectiveness of the revised aspects of the EEO-1 form for good cause, as we believe that continued collection of this information is contrary to the standards of the Paper Reduction Act (PRA). Among other things, OMB is concerned that some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues,” the statement said.
At the time, many criticized the move saying the Trump administration is making it harder for employers and federal agencies to identify pay disparities and employment discrimination. But others, including the U.S. Chamber of Commerce supported the decision saying the new data requirement would unfairly burden businesses due to the high cost of gathering, aggregating and reporting.
The goal of the 2016 data collection initiative was to address pay disparities. By collecting and reporting the data, employers have the opportunity to conduct self-audits and correct any pay disparities. These audits also give employers the chance to proactively change their pay practices and structures to bring about parity and avoid violations.
The data collection is also aimed at helping the EEOC, along with the Office of Federal Contract Compliance Programs in their enforcement efforts. This data is useful in detecting pay disparity trends and can help agencies analyze pay disparity patterns in specific industries or geographic areas.
The federal district court judge ruled that the administration broke the law when it stopped the pay data collection. In the order, Judge Tanya S. Chutkan said the OMB failed to show justification for the stay.
Stay tuned to learn more about whether the government will appeal the ruling and what the EEOC expects employers to do with respect to the 2019 EEO-1 survey. Additionally, the EEOC portal is not equipped to accept compensation data yet. There is uncertainty about the recent court’s decision.
In the meantime, The EEOC is expected to open its EEO-1 survey filing process for submissions on March 18, 2019, and employers must submit their EEO-1 data by May 31, 2019.
We will circle back to you for any new developments.