Recently, the federal government announced its intent to gather detailed information about the pay practices from businesses with more than 100 workers to address gender discrimination, making employers subject to a heightened pay transparency standard by the end of this calendar year.
What has been proposed?
The proposed Equal Employment Opportunity Commission (EEOC) action will require businesses to provide report employees’ earnings by gender, as well as race and ethnicity, to make it easier to identify pay gaps.
Who will be impacted?
This action will apply to businesses with more than 100 workers, encompassing more than 63 million Americans.
How will employers report the information?
Currently, employers complete the EEO-1 form on an annual basis, providing demographic information about race, gender, and ethnicity. New reporting would also require salary and pay information to be included.
Why has the change been proposed?
Announced on the seventh anniversary of the Lily Ledbetter Fair Pay Act, a federal law that overturned a Supreme Court decision making it easier for employees to bring equal pay claims, the goal of additional data-gathering is to allow the EEOC to identify businesses that might have pay gaps, and then target those who are discriminating on account of gender.
When will employers be subject to the new law?
It is anticipated that the revised EE0-1 form with pay collection data will be approved and put into effect this fall. Employers will have to submit pay data for the first time in September 2017.
What should employers do now?
It is critical for affected companies to make it a priority to review current pay systems, and identify and address any areas of pay disparity to minimize increased scrutiny next year.
Through internal gender-specific audits, employers can determine whether pay gaps exist and have time to determine whether disparities can be justified by legitimate and non-discriminatory explanations, or whether corrective action will be needed.
This alert provides an overview of a proposed new federal regulation. It is not intended to be, and should not be construed as, legal advice for any particular fact situation.
For more information about this proposal, or how it may affect your business, please contact Shayna Balch, partner at Fisher & Phillips or via phone, 602.281.3406.