NSBA Comments on EEOC Pay Data Collection Proposal

March 30, 2016

AA017956NSBA recently submitted comments to the U.S. Equal Employment Opportunity Commission (EEOC) on their proposed revision to the Employer Information Report (EEO-1) to include collecting pay data from employers, including federal contractors, with more than 100 employees. According to the EEOC, this new data will assist the agency in identifying possible pay discrimination and assist employers in promoting equal pay in their workplaces. The EEOC had specifically requested public comment on the utility and burden of collecting pay and hours-worked data as contemplated by the proposed rule.

NSBA expressed concerns that adding these pay data provisions would place massive and unnecessary burdens on smaller employers and waste federal resources on fruitless “fishing expeditions” based on incomplete and misleading information. NSBA fears that the EEOC severely underestimates the administrative burden this will place on smaller businesses—it would increase employers’ data collection and reporting burdens well beyond the EEOC’s stated estimates. As it is, smaller businesses disproportionately face higher annual regulatory costs of $7,454 per employee per year. A small business’s ability to operate efficiently and free of unnecessary and ineffective regulatory burdens is critical for it to compete, and to maintain and create jobs across the country.

The EEOC collects EEO-1 reports through its Joint Reporting Committees and provides the data to the Office of Federal Contract Compliance Programs (OFCCP) at the Department of Labor. EEO-1 data provides the federal government with workforce profiles from private sector employers by race, ethnicity, sex, and job category. This proposal would add aggregate data on pay ranges and hours worked to the information collected, beginning with the September 2017 report.

The new pay data is intended to provide EEOC and the OFCCP of the Department of Labor with insight into pay disparities across industries and occupations and strengthen federal efforts to combat discrimination. This pay data would allow EEOC to compile and publish aggregated data that will help employers in conducting their own analysis of their pay practices to facilitate voluntary compliance. The agencies would use this pay data to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.

To address these and other concerns, Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-Tenn.) recently introduced S. 2693, the EEOC Reform Act, which would put a halt to the implementation of the proposed pay data revisions to the EEO-1 report and require EEOC to better estimate the cost of collecting and securing the proposed pay data by gathering and ensuring the protection of federal employee pay data before implementing the EEO-1 revisions.

As stated in the letter, NSBA’s members fear that if the proposed rule goes into effect, they will need to spend an extraordinary amount of time gathering and inputting the information requested by the EEOC. And, without the opportunity to explain their decision-making process, employers also may be more likely to face baseless pay discrimination lawsuits. Small businesses that are already following the law simply do not have the resources to defend against misguided and burdensome bureaucratic inquiries into their legitimate pay practices, let alone expend thousands of dollars to defend against meritless lawsuits regarding the same. NSBA urged the EEOC to reexamine the impact this proposal will have on small employers before the final rules are adopted.