Controversial Obama-Era Employee Pay Reporting Rule Suspended

    Last week, the Acting Chair of the Equal Employment Opportunity Commission (“EEOC”) announced that the Office of Management and Budget (“OMB”)[1] was immediately suspending, and would further review, Obama-era pay data reporting rules.[2] The decision is a relief to larger businesses, many of which had decried the significant administrative expenses and burdens of Obama administration’s reporting rules.[3]

EEO-1 Reporting Requirements

    The EEOC has long required businesses with 100 or more employees, and federal contractors with 50 or more employees, to annually report data about their employees’ race, sex, ethnicity, and job categories on an EEO-1 report. In 2016, after a short comment period, the EEOC significantly expanded the EEO-1 reporting obligations, requiring employers to provide information about employee pay ranges and hours worked. At the time, the EEOC touted the change as a tool to help the EEOC and Office of Federal Contract Compliance Programs (“OFCCP”) “identify and combat pay discrimination.”[4] In contrast, many businesses and business associations denounced the change, noting that the expanded reporting requirements were costly and extremely burdensome, would yield no useful data for law enforcement or policy enhancement, and created serious privacy concerns for employers and employees.[5] The OMB cited these exact concerns in deciding to suspend the expanded EEO-1 requirements.[6]

Practical Takeaways

    The Obama-era requirements to report pay data would have imposed a significant bureaucratic burden on large employers, with arguably little (if any) practical upside from a law enforcement perspective. Although employers are welcoming the OMB’s decision, they must still comply with pre-existing EEO-1 reporting obligations. Therefore, on or before March 31, 2018, companies with 100 or more employees, and federal contractors with 50 or more employees, must submit EEO-1 reports for the year 2017. These reports, however, will not include pay ranges and hours.

    Finally, employers are reminded that the OMB’s suspension of the expanded EEO-1 reporting rules does not minimize the need for businesses to comply with federal, state, and local laws governing pay practices.

[1] The OMB is the Executive branch’s primary budget office.

[2] https://www.eeoc.gov/eeoc/newsroom/wysk/eeo1-pay-data.cfm; https://www.reginfo.gov/public/jsp/Utilities/Review_and_Stay_Memo_for_EEOC.pdf.

[3] See Written Testimony of Camille Olson on behalf of U.S. Chamber of Commerce. https://www.eeoc.gov/eeoc/meetings/3-16-16/olson.cfm.

[4] https://www.eeoc.gov/employers/eeo1survey/2016_eeo-1_proposed_changes_qa.cfm.

[5] https://www.eeoc.gov/eeoc/meetings/3-16-16/olson.cfm.

[6] In staying the EEO-1 expanded requirements, the OMB stated it was “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.” https://www.reginfo.gov/public/jsp/Utilities/Review_and_Stay_Memo_for_EEOC.pdf.