Investigation

Feds Likely to Force Companies To Report Pay By Race and Gender

After judge says Trump didn’t have power to undo an Obama directive, government could attempt to draw inferences about racial pay disparities in companies with as few as 101 employees

   DailyWire.com
A demonstrator supporting Harvard University's admission process holds a sign that reads "Defend Diversity" during a protest outside of the Massachusetts Bay Transportation Authority (MBTA) Harvard station in Cambridge, Massachusetts, U.S., on Sunday, Oct. 14, 2018. Harvard University was sued by a group that claims their law school illegally used race and gender as criteria for selecting law students to staff their most elite academic journals, a suit that comes amid growing scrutiny of affirmative action in college admissions.
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Federal authorities are expected to instate a never-implemented Obama-era rule mandating that companies provide the government with employee pay data broken down by race and gender, the latest in a series of actions the Biden administration has taken to use companies to push “equity.”

The Equal Employment Opportunity Commission (EEOC), which works to enforce federal civil rights laws against workplace discrimination, is likely to start requiring companies with more than 100 employees to include pay equity data in their Employer Information Reports. The idea behind collecting the data was that the EEOC would use it to identify and target companies that had a pay gap, interpreting differences in pay as discrimination.

The EEOC says that the workforce data is shared with other federal agencies, and “although the data is confidential, aggregated data is available to the public.”

The rule was announced in October 2016 by the Barack Obama White House’s Office of Management and Budget (OMB), but the Donald Trump administration scrapped the requirements the next year before it went into effect, citing privacy concerns as well as doubts about how useful the information actually is and the burden it could place on companies.

“Some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues,” the Trump White House’s OMB said.

That move prompted a lawsuit from the National Women’s Law Center and the Labor Council for Latin American Advancement, both of whom sued both the EEOC and the OMB in November 2017.

In March 2019, Judge Tanya Chutkan of the U.S. District Court for the District of Columbia, an Obama appointee, sided with the advocacy groups, issuing an opinion saying that OMB lacked “good cause” in its “arbitrary and capricious” move to suspend the new reporting requirements since the decision “totally lacked the reasoned explanation” required under federal law.

The judge directed the EEOC to collect two years of pay data broken down by race and gender. The agency collected the pay equity data for 2017 and 2018 before closing out the survey early last year.

Now, attorneys representing both employees and employers expect the pay equity data collection requirements to go back into effect, although it remains unclear when that would happen. The EEOC’s five-member commission still has a 3-2 Republican majority. If Biden wanted to reinstate the data collection mandate immediately, he would likely have to fire a Trump-appointed member of the commission in order to create a Democratic majority before July 1 of next year, when Republican commissioner Janet Dhillon’s term is up.

Just a week after Biden was inaugurated, former EEOC Commissioner and Acting Chair Victoria Lipnic, nominated to two terms by Obama, predicted that the agency will sharpen its focus on pay equity data collection.

“You can definitely expect a renewed emphasis on collecting pay data in conjunction with the [Office of Federal Contract Compliance Programs],” Lipnic said during a National Employment Law Institute (NELI) webinar.

Companies with more than 100 employees are already required to report the numbers of their employees by job category, race, sex, and ethnicity, but they are not required to submit compensation data.

In 2019, law firm Fisher Phillips warned employers to conduct an audit of their pay practices in order to root out any race or gender pay gaps that could “catch the eye of the federal government if you are forced to turn over this information.”

“You may have time to determine whether any disparities that may exist can be justified by legitimate and non-discriminatory explanations, or whether you will need to take corrective action to address troublesome pay gaps,” the law firm wrote in a post on its website.

The push for pay equity data reporting comes on the heels of other actions the Biden administration has taken to reverse Trump administration efforts at the EEOC.

Sharon Gustafson, appointed by Trump as EEOC general counsel, made waves last month when she penned a letter refusing the Biden administration’s request that she resign. She was immediately fired, prompting questions about the legality of her termination as well as a spirited condemnation of the president’s decision from one of Gustafson’s EEOC colleagues.

Less than two weeks after Gustafson’s abrupt firing, the EEOC sent out an agency-wide email that included a quote from notoriously anti-Semitic author Alice Walker.

Meanwhile, the Biden administration is moving to crack down on companies it perceives as falling short in equity.

Under the Biden administration, the Securities and Exchange Commission (SEC) has sharpened its focus on the “Environmental, Social, and Governance” (ESG) actions of publicly-traded companies, nebulous categories that one industry official said could lead to “politicizing the role of the corporation.”

The SEC is weighing expanding ESG disclosure requirements and forcing companies to publicly release data on the climate risks their investments pose as well as their workforce and board diversity.

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