After a contentious rulemaking process, an administration change and finally a federal court order, it is now the new normal for many employers to send their pay equity data to the federal government.
For most private employers with at least 100 employees, as well as federal contractors with at least 50 employees, it’s a yearly routine to send the Equal Employment Opportunity Commission their employee demographic data through the required EEO-1 report.
But this year, those employers must also submit data on their employees’ W-2 pay and hours worked — otherwise known as the EEO-1 Component 2 — for the past two years by Sept. 30. But even as the commission lays out detailed instructions clarifying how to collect and submit the pay data, it remains unclear to employers how the government will use it.
Under Title VII of the Civil Rights Act, the EEOC has traditionally collected reports on the number of workers employers have of each race, ethnicity and sex in different job categories. The commission uses that information to support civil rights enforcement and track employment patterns of women and minorities in different industries or companies.
Many employer groups balked when the EEOC under the Obama administration proposed adding a pay data requirement to the EEO-1, which they argued would be burdensome and carried confidentiality risks.