Businesses With 100 Or More Workers
Would Be Subject To Proposed New Law Aimed At Combating Gender Discrimination
The federal government announced at
the end of January 2016 its intent to gather additional pay information from
larger employers, forcing all businesses with over 100 workers to provide
detailed information about their pay practices in an effort to address gender discrimination.
If the President’s plan moves forward as expected, employers will be subject to
a heightened pay transparency standard by the end of this calendar year.
What Has Been Proposed?
The Obama Administration has proposed executive action through the Equal
Employment Opportunity Commission (EEOC) to require certain businesses to
provide detailed information about how much each of their employees is earning.
Affected employers must break down pay information by gender, as well as race
and ethnicity, after the law goes into effect in order to make it very easy to
identify pay gaps.
Who Will Be Impacted?
This executive action will apply to all businesses that employ 100 or more
workers. According to the White House, the proposal would cover more than 63
How Will Employers Report The
Currently all employers with 100 or more workers already complete the EEO-1
form on an annual basis, providing demographic information to the government
about race, gender, and ethnicity. Once the new revisions take effect, the
EEO-1 form will also require that salary and pay information be included.
Why Has The Government Proposed This
The federal government has specifically stated that the goal of this additional
data-gathering is to identify businesses that might have pay gaps, and then
target those employers who are discriminating on account of gender. It is no
coincidence that this plan was announced on the seventh anniversary of the Lily
Ledbetter Fair Pay Act, a federal law that overturned a Supreme Court decision
and made it easier for employees to bring equal pay claims.
In other words, once this new law
takes hold, the EEOC will have greater ease in identifying disparities and
areas of potential pay discrimination to determine where it will take
When Will Employers Be Subject To
The New Law?
If the proposal proceeds as scheduled, the draft revisions would be available
for inspection and public comment between February 1, 2016 and April 1, 2016.
The EEOC Chair has stated that she anticipates the rulemaking process to be
completed by September 2016, when the new rules would officially go into
effect. If this holds true, employers will have to submit their pay data for
the first time in September 2017.
What Should Employers Do Now?
In light of these developments, affected companies should make it a priority to
review current pay systems and identify and address any areas of pay disparity.
It is critical to take steps now to minimize increased scrutiny once the data
begins to be reported next year.
By conducting your own
gender-specific audit of pay practices, you will be able to determine whether
any pay gaps exist that might catch the eye of the federal government when you
turn over this information next year. You will have time to determine whether
any disparities that may exist can be justified by legitimate and
non-discriminatory explanations, or whether you will need to take corrective
action to address troublesome pay gaps.