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What employers need to know about new pay data requirement

Federal rules requiring some companies to report pay

Federal rules requiring some companies to report pay data by gender, race and ethnicity have been reinstated by a court decision. Credit: Getty Images/Yuri_Arcurs

A stalled Obama-era rule requiring certain employers to share pay data and hours worked by race, ethnicity and gender has been reinstated by a federal judge.  Though it is still unclear when the Equal Employment Opportunity Commission will start collecting that data — it has until April 3 to  post the time frame for reporting —  employers are advised to prepare ahead now.

The EEOC said in a recent statement  it “was working diligently on next steps in the wake of the court's order [and] will provide further information as soon as possible.”

 “Unfortunately, we still are in a 'wait and see' mode,” said Joy Chin, a principal at the Jackson Lewis law firm in Melville and co-chair of its pay equity group. 

The pay data requirement, intended to combat discrimination, was stalled by the  White House's Office of Management and Budget before it  was to take effect March 31, 2018,  said Annette Tyman, a  Seyfarth Shaw law partner in Chicago  on its pay equity group.

  But U.S. District Court Judge Tanya S. Chutkan  in Washington concluded on March 4 this year  that OMB’s delaying action was an “illegal” arbitrary and capricious decision that lacked a “reasoned explanation,” Tyman said.

Prior to Chutkan's ruling, private companies with 100 or more employees already had to file workforce data — not including pay — annually to the EEOC by race, gender and ethnicity across 10 job categories, said Dawn Davidson Drantch, corporate counsel at Alcott HR in Farmingdale. Federal contractors with 50 or more employees and at least $50,000 in annual contracts also had to file an EE0-1 report, she said.

On March 18 the online portal to collect the 2018 EE0-1 data went live, but it doesn’t seem to have been updated yet to accept the new pay data component, said Chin. In the meantime, companies can file electronically the EE0-1 data they have traditionally filed minus the pay data portion, she said.

As part of the new requirement, employers will have to report 2018 W-2 wages in 12 specific pay bands for each of the 10 EE0-1 job categories, along with hours worked, said Chin.  She advises readiness: “The most sound approach for employers at this point is to ensure systems are in place and they have the requisite data, and to pull test reports so they can review and make any necessary changes.”

 Tyman agrees and suggests  pulling together implementation teams  with guidelines on assembling pay data and hours.

 Still, it will be a bit of scramble for employers, she said. They were not expecting to have to produce this data. And business groups have argued the requirement would be a burden. 

 Regardless, in general as a best practice, companies should be looking at their pay data for “gender and race” equity, says Pamela Coukos, CEO at Working IDEAL consultants in Washington. “They should know whether there are issues and be putting in place a  plan to deal with [them] if there are,” she said.

Coukos applauded the judge’s decision, noting, “This data collection is really important, and it got derailed on a very flimsy basis.” Data like this is already being collected in the United Kingdom and "the sky has not fallen," she said.

Keep an eye on all requirements on  the EEOC website, said Drantch.  Since the pay data requirement was stalled, she said, “I think it kind of fell off of everyone’s radar.”

Fast Fact:

Total estimated cost for all affected businesses to comply with the pay data requirement: in excess of $400 million in labor costs alone, according to the U.S. Chamber of Commerce. The EEOC differs on this estimate and has estimated the compliance burden would be about $53.5 million.

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