Friday is often a no-news day because of the upcoming weekend. That is not true of Friday, January 29th. It is the day that the Obama Administration chose to propose a new rule affecting all employers with 100 or more employees. Each employer of this size is required to complete an EEO-1 annually detailing the composition of their workforce. This information provides the government a picture of the race, gender, and job groups of employees.
As of Friday, employers will also have to report compensation as well. With this data the government could identify employers with significant wage disparities. This is one of the continuing efforts to reduce the pay inequities experienced by women and racial minorities. Failure to add this information could result in substantial fines, as could showing substantially different levels of pay within the same job group attributable to men and women or minority status
One beneficial aspect of the new rule would be that once the data is collected, the government plans of creating a salary report showing the average pay for different categories and positions. This could be another source of pay information for employers to use in setting pay rate for employees. However, the data also could be used as support for a wage claim where an employee alleges discrimination.
If this proposed rule goes into effect, employers will need to be prepared to provide the necessary information each year. We suggest that employers ought to do their own preview of the data before it is required and assess whether any changes or adjustments are needed so that significant disparities are not present when the data has to be sent to the government.
There will be a 60 day comment period starting February 1st after which the rule will be modified or issued as a final regulation.