The United States Department Labor recently issued a Notice of Proposed Rulemaking to enforce President Obama’s September 2015 Executive Order establishing paid sick leave for federal contractors. Now that we have been able to digest the lengthy proposed rules, we wanted to share some of our thoughts about the proposed rules with you.

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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As previously reported on this Blog, recent news reports indicated that President Obama would be issuing an Executive Order mandating paid sick leave for the employees of federal contractors. The President did just that on Monday (Labor Day). We have read the Executive Order and our analysis regarding its contents remains the same as

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