EEOC Announces Proposed Collection of Pay Data with EEO-1 Reports

The federal government’s enforcement efforts relating to equal pay are intensifying after President Obama’s recent announcement that the Equal Employment Opportunity Commission (EEOC) will begin to collect expanded information on pay data and hours worked from employers with 100 or more employees completing the annual EEO-1 form.

As we have previously reported on this Blog, the Obama Administration has taken unprecedented action over the past two years to increase the number of requirements imposed upon companies with federal contracts or subcontracts. These requirements have ranged from increasing the minimum wage for employees of federal contractors/subcontractors to $10.10/hour (now $10.15), new protections for LGBT workers, mandatory paid sick leave, and new regulations regarding pay transparency. Experts expected that the Administration would announce a rule for collection of pay data from federal contractors but most were floored when the President announced on January 29, 2016 that all businesses with 100 or more employees would need to provide pay data to the EEOC and the Office of Federal Contract Compliance Programs (OFCCP).

The EEO-1 report is an annual survey completed by most federal contractors and all employers with at least 100 employees. The survey requires employers to provide data on employees by job category, sex, race, and ethnicity. The EEOC announced that beginning with the report due on September 30, 2017, the EEO-1 report will be revised to include expanded information on pay data and hours worked. Pay Data will also be collated based on gender, race, and ethnicity. The new Section of the form can be found here. Per the EEOC, once the information is gathered, the data will be used to investigate discrimination complaints, identify pay discrepancies among males/females and minorities/non-minorities across various industries and job classifications, and to discover discriminatory pay practices. The Commission also intends to aggregate and publish the data in order to allow employers to evaluate their own pay practices to ensure compliance.

Secretary of Labor Thomas E. Perez said that the government cannot ensure equal pay unless it has “the best, most comprehensive information about what people earn.” We sincerely doubt that this new burden will do much to combat pay discrimination and that the information will have no practical utility in combating pay disparities. Those familiar with the EEO-1 form know that employees are divided up into 10 incredibly broad job categories. Within these broad categories, the EEOC has identified 12 pay bands for purposes of government reporting.

Comparing the W-2 wages of employees based on these broad categories, without the opportunity to demonstrate legitimate, non-discriminatory reasons or any context for pay decisions, will surely raise a red flag with the EEOC and could result in unnecessary and unproductive investigations. For example, your company might place all engineers into the “Professionals” category. If you have a female engineer who has worked for your company for 5 weeks making $129,000/year and a male engineer who has worked for your company for 5 years making $163,000/year, the EEOC’s metric will surely indicate potential gender discrimination when it is clear that no such discrimination has occurred (because the male has 5 more years of experience than the female).

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The National Labor Relations Board 2015 Year in Review

To mark the 80th birthday of the National Labor Relations Act, the National Labor Relations Board apparently decided to make history in 2015. The Board did just that,  issuing several ground breaking decisions, and in the process addressed facts and circumstances that could not possibly have been contemplated in 1935. The ramifications of the Board’s agenda will certainly have both short and long term impact on employers and labor unions.

For an overview of major labor law developments in the past year, check out our McNees White Paper entitled The National Labor Relations Board 2015 Year in Review.

McNees Podcast – Train Your Supervisors!

Employers are faced with an ever-increasing body of state and federal law governing a variety of labor and employment issues – from anti-discrimination laws, to medical leave and accommodation laws, to wage and hour laws, and much more. Do your supervisors and managers understand your organization’s legal obligations?  Do they understand that their actions may result in liability for not only the organization, but potentially themselves?  Do supervisors and managers understand how they can help minimize your organization’s risk of exposure to legal claims?

Periodic, targeted training can give your supervisors and managers the tools they need to understand the organization’s legal obligations and their obligations to the organization.  This will, in turn, help minimize your Company’s exposure to legal claims in the labor and employment arena.  Learn more about the benefits that proactive training programs can have for employers by viewing our brief podcast by clicking here.

#RaiseTheWage: Why is Voluntarily Raising the Minimum Wage Rate Trending Across the Country?

For employers covered by the Fair Labor Standards Act (“FLSA”), the debate in Congress over the minimum wage has been a hot button issue. Interestingly, 29 states in addition to Washington D.C., have already enacted legislation that imposes a minimum wage rate that is higher than the minimum wage under existing federal law. Pennsylvania is one of only 14 states with a minimum wage matching the minimum established by federal law, which went into effect in July of 2009. In states without a minimum wage law or with a minimum wage lower than the federal minimum, the federal law controls and supersedes the state law for all employers covered by the federal law.

While the heated contest in Washington, D.C. continues over what constitutes a “living wage,” the last two years have shown steady growth in middle- and high-paying job markets as opposed to jobs paying minimum wage, according to the Department of Labor’s “2015 Round-Up: 10 Things to Know About the Labor Market.” For Dr. Heidi Shierholz, the Labor Department’s chief economist, “[t]his is a shift. In the first few years of the recovery, we were disproportionately adding low-wage jobs. But over the last two years, as the labor market has strengthened, the pattern of strong growth in very low-wage jobs has shifted to a pattern of strong growth in middle- and high-wage jobs.” Anecdotally, this trend, while not rooted in the federal government’s push to increase minimum wage requirements across the board, nonetheless illustrates that employers are finding value in paying higher wages.

Why pay higher wages to low-skilled positions if you don’t have to?

Although many smaller businesses shudder at the thought of a new law requiring significantly higher hourly wages, one of the tangible benefits to taking the plunge early and raising the minimum wage rate for low-skilled positions is the ability to phase in stepped raises over a period of time (provided the federal government and state legislatures don’t force your hand first!), giving your business the opportunity to adjust and budget accordingly rather than suddenly facing potentially significant jumps dictated by legislation.

Another plus recognized by businesses is that raising the minimum wage puts more cash in employees’ pockets, allowing those individuals to then increase their discretionary spending. This domino effect positively impacts businesses by increasing sales of products and services that were not previously affordable for the minimum wage earner.

From a workforce development perspective, raising the minimum wage can amount to a triple play for your organization. Raising wages often increases workforce morale, which can boost productivity and, in turn, boost your bottom line. Higher wages will also increase your company’s chances when competing for talent. The retail industry, for example, sees the labor pool for minimum wage-paying jobs shrinking, and national retailers such as WalMart, TJ Maxx, and Target have responded by raising their minimum wage to enhance recruitment efforts in competing for applicants. Finally, staying competitive with wages can enhance your retention of talent, eliminating the costly need to continuously seek, hire, orient, and train new employees to replace the ones who left for a job with better pay.

While the battle over the federal minimum wage rages on, both public and private employers across the nation have recognized the realities of the labor market and the tangible value of voluntarily raising the minimum wage paid to employees.  There are various ways your organization can orchestrate such changes to achieve new heights of quality and productivity along with recruitment and retention success, all positively impacting your organization’s performance.  Contact us with questions or for guidance, and we would be happy to work with you on your organizational development goals.