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EEOC Proposes Revisions to its Enforcement Guidelines and Modifications to EEO-1 Reports

The Equal Employment Opportunity Commission (EEOC) was busy in the last couple of weeks.  On January 21, 2016, it published draft enforcement guidance on the issue of retaliation for the first time since 1998.  According to the EEOC’s press release, the revised guidelines are necessary in light of significant changes in case law, and the fact that the percentage of retaliation charges has roughly doubled since 1998. In particular, in Univ. of Tex. SW Med. Ctr. v. Nassar, 133 S. Ct. 2517 (2013), the Supreme Court expressly rejected the EEOC’s prior position on retaliation and held that retaliation under Title VII always requires “but-for” causation.  In other words, it is not enough that protected activity is merely found to be a “contributing factor” for an adverse action.  This heightened burden notwithstanding, retaliation claims do not seem to be going away.  Indeed, 53% of the violations the EEOC found in 2015 included Title VII retaliation.

Second, on January 29th the EEOC issued a Proposed Rulemaking which would modify the information that must be disclosed in EEO-1 reports to include pay data.  All employers with 100 or more employees must file EEO-1 reports (and federal contractors with 50 or more).  Currently, EEO-1 reports include data about employees’ ethnicity, race, and sex, by job category.

The Proposed Rulemaking would require that employers additionally report information about its pay practices to the Agency.  The Department of Labor and the EEOC have championed the notion that “pay transparency” is the key to reducing the gender wage-gap, and thus these modified reports would include both compensation data as well as data regarding hours worked.  The EEOC published a sample of the proposed pay data collection form here.

Regarding the burden this would cause, the Proposed Rule suggests that the “capabilities of HRIS software” eliminate any such concerns.  According to the EEOC, “the W-2 data can be imported into a HRIS, and a data field can be established to accumulate W-2 data for the EEO-1.  Alternatively, employers could obtain this pay information by utilizing quarterly payroll reports for the previous four quarters.”

And regarding the hours-reporting proposition, the EEOC says that it would not require that employers start collecting additional data on actual hours worked for salaried workers –rather, it likely would just use an estimate of 40 hours per week.

The utility of this expanded collection effort is not easy to understand.  The “job-categories” for instance are far too broad to provide any legitimate comparison of pay-practices across ethnicity and gender.  Although the EEOC says that the new data would provide them with insight into “pay disparities across industries and occupations,” it is hard to understand how compensation data alone, without more information about the actual jobs being performed, could provide any meaningful insights into discriminatory pay practices.

Employers are encouraged to give public comments on this Proposed Rulemaking, and may do so prior to April 1, 2016. Should the Proposed Rulemaking be adopted, it would first apply to EEO-1 reports due September 1, 2017.  If you have any questions about how to prepare for this expanded EEO-1 reporting requirements, or need assistance in conducting an internal pay-practices audit, please do not hesitate to contact us.

The attorneys at Martenson, Hasbrouck & Simon LLP advise employers nationwide in dealing with equal pay issues, as well as other matters relating to labor and employment law.

The new rule has already been subject to legal challenge. On March 30, a coalition of employer groups, including the National Association of Manufacturers, filed suit in the United States District Court for the Eastern District of Arkansas, alleging that the DOL’s new regulations exceed the agency’s authority, are vague, arbitrary and capricious, violate the First Amendment and the National Labor Relations Act, and unlawfully infringe upon the attorney-client privilege. Among other relief, the lawsuit seeks a preliminary injunction against enforcement of the regulations pending legal challenge. Similar lawsuits in other venues are likely to follow. We will continue to monitor this litigation.

If you have any questions about the content of this client alert, please contact any MHS attorney.

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