Pressure Mounts on Feds to Cut Rule Requiring Pay Data – HR Unlimited, Inc

https://hrunlimitedincblog.wordpress.com/2017/03/07/pressure-mounts-on-feds-to-cut-rule-requiring-pay-data/

Last month, Victoria Lipnic, interim Chair of the Equal Employment Opportunity Commission (EEOC) expressed her opinion that the revisions to the EEO-1 form requiring disclosure of pay data from employers should be re-evaluated. Her statement fell short of advocating outright repeal, mainly because Democrats still have a majority of the seats on the Commission. Still, it sent a shot across the bow and gave a possible hint as to what the EEOC under the Trump Administration might do with this particularly controversial revision.

Now, the U.S. Chamber of Commerce has come out in favor of eliminating the rule or delaying its implementation by way of petitioning the Office of Management and Budget (OMB) to rescind its approval of the rule. The Chamber recently sent a letter to John Mulvaney, the director of OMB, which oversees and approves administrative rules for all federal agencies, requesting the rescission or at least review, which would delay implementation of the rule.

The rule has never been popular with the business sector. At its core, it requires employers with 100 or more employees to report summary pay data, specifically what it pays its employees categorized by gender, ethnicity and race as part of the annual Employer Information Report or EEO-1. The stated purpose of the data collection is to allow the EEOC greater information to use to investigate pay discrimination and wage gaps. The information provided would not include individual pay, salaries, or any information that could identify a worker personally.

Lipnic, then as a commissioner, voted against its adoption when it was first introduced. She was out-voted by the Democratic majority on the board and the rule was approved with a deadline from September 30, 2016, until March 31, 2018-to prepare for this change. Given the due date which is almost exactly one year away, the pressure on the Trump Administration to make a decision about the fate of this rule is mounting because businesses will need to start preparing for the change by obtaining new software, hiring staff, and making other expenditures to become compliant on the deadline.

Keeping these deadlines in mind, the Chamber in its petition to OMB to rescind the rules, pointed out numerous flaws that it had identified in the program that it claims OMB approved in error. Specifically, the Chamber argued that the EEOC failed to meet it regulatory burden under the OMB’s rules to show that the collection of the data would be useful or have any utility in furthering the EEOC’s directive of fighting pay discrimination.

Further, the Chamber argued, the EEOC failed to adequately disclose the costs and burdens the new reporting requirement would put on employers. The Chamber argued that the costs and burdens were far higher than those estimated by the EEOC and argued that employers could easily be required to collectively spend upwards of $400 million each year to provide the data.

The Chamber urged OMB to see the error of its ways and pull back the approved regulations, preferably sooner rather than later, to at least hold them in abeyance while the Trump Administration decides how it wants to proceed. Presumably, the Chamber is also working the Administration directly to make some decision as to the immediate fate of the rule.

The Chamber’s attempt to kill the rules through the OMB rather than the EEOC can be explained by the fact that as of now, the EEOC’s board is still made up of a majority of Democrats, all of whom voted for the rule revision. It is very unlikely that they would change their mind now, meaning Lipnic and the Administration will have to wait them out until their terms expire. This will not happen until later this year, which may be too late for some companies who would have already begun to make investments to comply.

For her part, Lipnic recently stated that she was not surprised that the rule’s burden was being reviewed and questioned by stakeholders. She also stated that she was sure that OMB was going to give the matter a full review.

For more information, contact Ahmed Younies at 714-884-4610 or ayounies@hrunlimitedinc.com.

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