Presented by the Employment Law Practice Group

Legal Updates for Employment Law

September 13, 2017

EEOC Pay Data Reporting Rule Suspended Indefinitely

One of the hottest topics in employment law today concerns the EEOC's highly controversial revisions to the Employer Information Report (EEO-1 Report), which added new and extensive reporting obligations pertaining to employee pay data. Until recently, the revised EEO-1 Report was set to go into effect in March 2018. That all changed on August 29, 2017, however, when the federal Office of Management and Budget (OMB) suspended the rule indefinitely, giving employers a reprieve on the new pay data requirements—at least for the time being.

At the end of President Obama's term in office, the EEOC—in line with the Commission's national strategic enforcement priority focused on equal pay in the workplace—made significant revisions to its annual EEO-1 Report to mandate the submission of worker pay data. In recent months, however, there has been a loud call from the business community for the Director of the OMB to conduct a review of the revised EEO-1 Report to ensure that the benefit of the newly required information outweighed the burden placed on employers by the new reporting requirements. At the very end of August, the OMB—pursuant to its authority under the Paperwork Reduction Act—answered employers' pleas and put the brakes on the new pay data reporting obligations by staying the pay data reporting component of the revised EEO-1 Report indefinitely. The OMB took issue with several aspects of the proposed regulations, including the fact that the revisions were made without a notice and comment period, as well as inaccuracies concerning the rule's estimates regarding the expense and manpower that would be required to comply with the rule. In addition, the OMB also found good cause to stay the rule as a result of its concern that "some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues."

Accordingly, with the stay in place, employers no longer are required to comply with the compensation component of the revised EEO-1 Report. Instead, employers can continue to use the current EEO-1 form to comply with the EEOC's reporting obligations for the fiscal year 2017. Employers are, however, still required to meet the revised filing deadline of March 2018 for submitting their EEO-1 forms, which must provide data pertaining to workers’ race, ethnicity and gender. Moreover, although the new pay data reporting requirements have been suspended, employers must remain cognizant of the fact that the EEOC has expressed its clear intent to continue focusing on its equal pay priority of eliminating unlawful wage disparities in the workplace for the foreseeable future. Although pay rates no longer have to be reported to the EEOC, employers must still ensure that any potentially problematic pay disparities are either eliminated or readily explainable with legitimate, non-discriminatory business rationales.

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