On January 29, 2016, the White House, vís a vís President Obama, released its intent to take further action addressing a troubled reality in this country – the gender wage gap. A White House Fact Sheet notes that the median wage of a woman working full-time, year-round in the United States is about $39,600 – only 79 percent of a man’s median earnings of $50,400. In part based on state action in California and New York addressing equal pay laws, President Obama is pushing forward to advance pay equality. His call to action was met, when on February 1, 2016, the Equal Employment Opportunity Commission (EEOC), in partnership with the Department of Labor (DOL), released a finalized proposal of a rule in the Federal Register. See the proposed rule here.
Essentially, the new rule amends the Employer Information Report (EEO-1) that employers with more than 100 employees already file with the federal government, which includes information on the racial, ethnic, and gender breakdown of their employees. The proposed revision would allow the federal government to gather additional pay information including data on employees’ W-2 earnings and hours worked. The government states that the “new policy lays important groundwork for progress toward achieving equal pay, as it will encourage and facilitate greater voluntary compliance by employers with existing federal pay laws- such as by evaluating how they are currently paying their employees.”
It’s important to note that the proposal does not compel employers to collect new data, but rather require the reporting of pay data that employers already maintain in the ordinary course of business. Specifically, the new pay data that’s requested by the government consists of grouping employees into 12 pay bands for 10 different EEO-1 job categories. For employers, the EEOC has published a proposed pay data collection form; it is available here.
As it comes on the seventh anniversary of the Lily Ledbetter Fair Pay Act, a federal law making it easier for employees to bring equal pay claims, this new rule would cover more than 63 million Americans, according to the White House. Federal contractors and subcontractors with between 50 and 99 employees will only be required to submit the current information required by EEO-1, and not the new W-2 wage and hour information, however.
Employers would be encouraged to submit their comments to the proposed rule during the public comment period, which closes April 1, 2016. And if the rule goes forward as planned, it would be slated to take effect September, 2016, with those employers having over 100 employees submitting for the first time, the new pay data, beginning September, 2017.
Final note: Because of the government’s vociferous intent to pursue pay equity, employers would be well-advised to conduct a pay audit of their practices and identify wage gaps that can be attributed to gender-specific, or any other discriminatory differences. And before the EEOC starts to probe into red-flags shown from the data, it would be crucial now for employers to address any of these unjustifiable pay disparities that may be borne out of prohibited discriminatory employment practices.
By: Nikko Stevens