WASHINGTON — Industry groups voiced opposition to a new requirement unveiled by the Equal Employment Opportunity Commission and Obama administration officials Thursday that will require businesses with more than 100 employees to collect and report summary pay data broken down by race, ethnicity and gender.
The EEOC said the new pay data rule will help “better focus investigations on employers who are illegally short-changing workers’ pay based on gender, race or ethnicity.”
“Too many people are not paid equally even when performing the same work with the same education and experience,” said Jenny Yang, chair of the EEOC. “Although our country has made substantial progress in advancing equality, significant gaps in earnings persist across race, gender and ethnic groups.”
The EEOC is revising a form known as the EEO-1 that employers have had to file annually for the past 50 years. Businesses have long used the form to report demographic information to the commission on their workforces, the commission said. The revised form will now require them to report summary pay data on the range of compensation paid to employees of each demographic group. But companies will not have to disclose individual employees’ salaries.
“This pay data will help fill a major void in the information we need to identify where pay problems exist,” Yang said. “This insight into pay disparity across industry and occupation will help us to more effectively focus investigations, assess complaints of discrimination and identify pay disparity for further examination. The data will also help employers evaluate their own pay practices to help prevent pay discrimination in their workplace.”
The new reporting requirement is expected to cover 60,000 employers and 63 million employees. Employers will be required to submit the 2017 pay data by March 31, 2018.
Retailers will have to adhere to the final rule but have argued it will impose a new reporting burden on them that will only yield “distorted data.”
The Retail industry Leaders Association argued that the rule is “unlikely to identify unlawful pay practices because summary compensation data is a poor means for comparing differently situated individuals who may be swept into the same category, such as a retail salesperson and a real estate agent.”
“RILA and its members strongly support equal employment opportunity and have adopted policies that prohibit discriminatory practices, including discrimination in compensation,” said Evan Armstrong, vice president for government affairs at RILA. “Unfortunately, rather than advancing the cause of equality, the [requirement] will instead lead to misinformed and ineffective enforcement efforts that are unlikely to root out the unlawful conduct we all oppose.”
RILA, which filed formal comments at the EEOC, said compensation pay data will need to be provided for “extremely broad job categories, such as professionals, technicians and sales employees, without regard for the range of job skills within each category, or in some cases, the regional differences in compensation.”
The National Retail Federation said in its comments to the administration that the changes would “create a data collection process that is unduly burdensome for covered employers, require the compilation of data that does not accurately reflect workplace compensation practices and report data that cannot be analyzed under any recognized legal standard for evaluating pay discrimination.”
In a survey conducted by NRF, retailers reported there would be excessive filing burdens because many do not maintain payroll or hours worked data by gender, race or ethnicity.
“The burden of gathering, merging and reconciling this flawed compensation and hours worked data outweighs any use for the data,” the NRF argued.
Stephen Lamar, executive vice president at the American Apparel & Footwear Association, said: “This new requirement raises concerns because it amounts to new compliance costs being imposed on U.S. businesses. Such costs ultimately interfere with companies’ abilities to hire more workers or pay those workers higher salaries.”