As the dust settles from the 2016 election, predictions abound regarding what a Trump presidency will mean for employers. Predicting what policy changes an administration will make is difficult after a typical election year . . . and Donald Trump’s successful campaign was anything but typical. One issue employers may be concerned about is what is going to happen to the new EEO-1 reporting rule that requires employers with 100 or more employees to annually submit detailed pay data and work hours—in addition to race and gender data—for all employees beginning in 2018.
Unfortunately, it’s not clear. President-elect Trump campaigned on a promise to (among other things) relieve businesses of unduly burdensome regulations enacted during President Obama’s Administration. Therefore, the EEO-1 pay data reporting requirements may be one of the rules on the chopping block.
Notably, the EEO-1 is a regulatory data collection, which unlike a Presidential executive order cannot be rescinded by a unilateral Presidential action. Any changes to the EEO-1 report obligations are done so at the direction of the EEOC and are subject to the Paperwork Reduction Act. Currently, EEOC’s five Commissioners are majority Democrat, including Chair Jenny Yang. Chair Yang’s term expires in July 2017 and then President-elect Trump will be able to appoint a new Chair, which will likely shift the majority to the Republicans. At that time, a Republican-majority EEOC could revoke the rule entirely or more likely revise the rule to make it less burdensome for employers.
Another possibility is for the Republican-controlled Congress could pass legislation blocking the EEOC’s rule. Since changes to the EEO-1 were first proposed, the senate and house have both introduced bills to block the EEOC from collecting the new information, including the EEOC Reform Act, but none of those bills have gained much momentum under President Obama.
While it is unclear what may happen to the EEO-1, what is clear is closing the “pay gap” has become a national priority and will likely remain so. Over the past year several states have proposed or passed new or expanded fair pay laws, activist investors are increasingly exerting pressure on companies to guarantee “pay equity,” and there’s been a rise in pay discrimination litigation. And even though pay equity was not a focus of Trump’s campaign, his daughter Ivanka has been an equal pay advocate and, as one of Trump’s closest advisors throughout the campaign, will likely continue to be involved in shaping his administration.
Given the report’s uncertainty, employers should continue preparing to submit pay data in the next EEO-1 and addressing pay equity in their workforces. The first submission of compensation through the revised EEO-1 report is not due until March 2018. Accordingly, employers should consider conducting a trial run in March 2017 with 2016 W-2 data to ensure their data systems (HRIS, payroll and timekeeping systems) are accurately and effectively capturing the required information for reporting purposes. This will also help employers identify any potential vulnerabilities that may lead EEOC to take a deeper look into whether the employer has pay disparities. In addition to conducting an analysis based on the data required for the EEO-1, employers should also conduct privileged, proactive pay analyses to determine if any unexplained disparities exist and address them.
REGISTER HERE for Laura’s next webinar titled, “Pay Equity is “Comp”licated – New Rules, New Reporting, and Responding to the Rising Tide of Pay Discrimination Claims”
About the Author: Laura Mitchell is a Shareholder, Affirmative Action & OFCCP Practice Group at Jackson Lewis P.C. You can read more about Laura on her webpage at Jackson Lewis.