It’s not fair, women making about three quarters of every dollar earned by men for the same work. Latest government statistics show women earn 76 to 77 cents on the dollar as compared to men. Most would agree this is a problem, and would support efforts to do something about it. Now the U.S. Equal Employment Opportunity Commission (EEOC) is trying to take action. But is the EEOC’s plan going to be effective in battling this pervasive problem, or just create more administrative burdens and legal traps for employers?
Proposed EEO-1 Form to Require Pay and Hours Data
Each year in the fall, private employers with 100 or more employees and some federal contractors with at least 50 employees must submit to the EEOC an EEO-1 report, in which the employer discloses race, ethnicity, and gender demographics of its workforce categorized by job category. The EEOC has just announced proposed regulations that would expand the information sought in the EEO-1 report to include wages and hours worked by all employees by job category. Certain changes to demographic and job category information also are contemplated. The proposed regulations were published on February 1, 2016, in the Federal Register. The proposed EEO-1 form may be found here.
Do Concerns Outweigh Benefits?
But the new EEO-1 form may bring more uncertainty than solutions. Efforts even to complete the new EEO-1 form might be a hard pill to swallow. It can be challenging enough for employers to complete the form in a timely and accurate manner, especially those without a dedicated human resources department. HR personnel often mull over which job category to designate difficult-to-label workers, and which race/ethnicity category to select for employees who have not self-identified. Indeed, designating gender, too, may be fast becoming more a matter of self-identification than certainty. Although the EEOC’s website provides helpful guidance for completing the form, most HR professionals who are responsible for doing it still ponder over how to present the data accurately.
The addition of salary and hours data to the mix could be daunting even to experienced human resources personnel, requiring more training and resources from an already overworked HR staff. Add to that the practical reality that most employers do not keep detailed records of hours worked for exempt, salaried employees. Although some employers are already expected to do so (under, for example, Illinois Department of Labor regulations), most do not concern themselves with strict adherence, and any such requirement seems to have been, up until now, one of form over substance. If the EEOC starts to require hours reporting, it would seem to suggest a trend in the other direction. While it is anticipated that the EEOC would accept a generic response of “40 hours” for exempt employees, it calls into question why the information is sought in the first place: why not ask for disclosure of hours worked only for non-exempt employees, which is data that employers already collect?
Another concern may be public disclosure of wages. For private companies, this information is something that often is held close to the vest as a competitive tool. Will this make poaching easier for competitors looking to lure employees with promises of higher pay? Wages in the new EEO-1 form would be expressed in salary ranges, not specific salaries of individuals, which offers some protection in this regard. But is it enough?
Enforcement concerns are raised, too. As employers are often reminded when investigations start to go off the rails, the EEOC is authorized to investigate any evidence of a Title VII violation that it uncovers during an investigation, even if it is outside the scope of the charge filed by the charging party. For instance, employers often submit their employee handbook to the EEOC during an investigation. Regardless of the charge the EEOC is investigating, if it finds a policy in the handbook that it believes to be potentially discriminatory, it can decide to investigate the employer for that apparent violation as well, even if the policy has nothing to do with the original charge the handbook was submitted to defend against. Fast forward to 2017, if the new EEO-1 form takes effect. When a charge of discrimination is filed against an employer, the EEO-1 report is routinely sought in the EEOC’s investigation. It is not difficult to imagine the implications for employers with surface irregularities in wages and hours data.
Lofty Goal, Flawed Execution?
The EEOC’s plan might be missing the mark. It can be argued that the data submitted in the EEO-1 is so general that it would be impossible to make intelligent determinations about gender (or racial) wage inequities. Without comparison of education, qualifications, responsibilities, and other contributions of any two workers, all outside the scope of the proposed EEO-1 report, what useful conclusions can be drawn from knowing the salary ranges of individuals paid in the same job classifications? Is this just making more work for employers for no decipherable benefit?
On the other hand, perhaps the EEOC is to be encouraged for at least attempting to address the problem. Change has to start somewhere, even with an imperfect solution. Let’s hope that the EEOC will recognize the deficiencies in its own reporting system and utilize its enforcement powers sparingly, in a manner that recognizes the flaws and unreliability of the data.
Employers that want to comment on the proposed regulations can do so here. The comment period expires April 1, 2016.
For more information or to discuss compliance issues, please contact Schiff Hardin’s Labor & Employment Group.