New federal rules to promote pay equity will require larger...

New federal rules to promote pay equity will require larger employers to provide pay data by gender, race and ethnicity. Credit: Getty Images/iStockphoto / RapidEye

To combat pay discrimination, the U.S. Equal Employment Opportunity Commission will require certain employers to start providing employee pay data by next March.

Last year, the EEOC approved a revised reporting form that would require businesses with 100 or more employees to report for the first time summary pay data and hours worked, in addition to the data they already provide annually regarding the gender, race and ethnicity of employees in various job categories.

  • Plan ahead. Employers are encouraged to start preparing for the change, though there’s still some uncertainty over its implementation under the new administration.

“Companies should already be organizing their data and reviewing it,” says Pamela Coukos, a principal at Working IDEAL, a Washington, D.C.- based consulting firm focused on pay equity, diversity and inclusion. “The purpose is really to make sure that the kind of standard reporting and analysis that employers already do with workplace diversity includes pay equity to ensure fairness.”

  • Don’t count it out. It would be foolish to table those efforts with the hopes the requirement will be rescinded, she says, adding that pay equity is something employers should be looking at anyway. “This is an issue that has become really significant,” she says.

Still, the new form has faced opposition from various business groups, and President Donald Trump’s acting EEOC chair, Republican Victoria Lipnic, voted against the revision before being named acting chair. She was outvoted by three Democratic EEOC commissioners.

In an emailed statement to Newsday, Lipnic said: “It’s not a surprise to me that the burden of this rule is being questioned, and a petition for reconsideration of the rule’s costs and benefits has been filed with the Office of Management and Budget. I’m confident OMB will give it a full and fair review.”

It’s not clear whether Trump’s mandate directing federal agencies to repeal two prior regulations for every new one they issue applies to independent agencies like the EEOC, says Lynne Anderson, a partner at Drinker Biddle & Reath in Florham Park, New Jersey, and co-chair of its fair-pay initiative.

Plus, the current structure of the five-member EEOC could change because there will be two vacancies, come July, at which point Trump could appoint two Republican nominees, she says, noting a repeal would require a majority vote.

Anderson guesses that, if anything, there could be a modification to the reporting requirements, but not a repeal because Lipnic has said she considers equal-pay issues a priority.

  • Analyze pay. So employers may want to consider doing a pay analysis, she says.

“Not all pay disparities are discriminatory,” says Joy Chin, a principal at the Jackson Lewis law firm in Melville and co-chair of its pay equity group. “Sometimes you might have pay disparity for legitimate business reasons,” such as more experience or responsibility.

As part of the new requirements, employers will have to report 2017 W-2 wages in 12 specific pay bands for each of the 10 EEO-1 job categories, along with hours worked, she says. The filing deadline is March 31, 2018. (See survey/2017.)

  • Be proactive. Depending on their tolerance for risk, companies may take several approaches, such as reviewing their record-keeping to ensure they can pull together the information required for the new EEO-1 report, says Chin, or preparing a mock report to ensure they’re able to compile the report and analyze data to identify any potential issues.

It pays to be proactive, says Alan Klein, CEO of Ace Payroll Services Inc., a workforce management solutions company in Melville: “It would be prudent to start the review process now” for efficiency’s sake.

Fast fact

$50 million

Estimated annual cost for all affected employers to comply with the new federal pay reporting requirement

Source: Equal Employment Opportunity Commission