Compensation Administration

Business Group Says New EEO-1 is ‘Useless’

Compensation data that employers may have to provide the federal government next year will not help combat pay discrimination as intended, according to the nation’s largest business group.

Camille Olson

Camille Olson speaking to lawmakers / Edworkforce Committee /

Speaking on behalf of the U.S. Chamber of Commerce, Camille A. Olson told lawmakers at a recent hearing that that “while the Chamber strongly supports equal pay for equal work, the revised EEO-1 form will not promote equal pay because the data being collected on that form, at enormous costs, is useless for that purpose.”

The new form, issued by the U.S. Equal Employment Opportunity Commission (EEOC) and approved by the White House Office of Management and Budget (OMB) before President Trump took office, must be filed in March 2018. Business organizations and Republican lawmakers have asked Trump’s OMB director to rescind approval of the form.

EEO-1 Background

The EEO-1 previously was used by the EEOC to look for various types of discrimination, but now the commission intends to broaden its use to include pay discrimination.

Jenny Yang, an EEOC commissioner who chaired the commission when it adopted the new form, said that the information collected will help employers evaluate their pay practices while strengthening the commission’s enforcement of nondiscrimination laws.

Business groups and Republican lawmakers, however, have argued that the form is unduly burdensome and doesn’t account for pay disparities not based on gender.

When Trump took office, he named then-commissioner Victoria A. Lipnic as acting chair. Lipnic isn’t a proponent of the form but, because she is the lone Republican on the commission, she doesn’t have the votes to reverse course now.

In what is seemingly a last-ditch effort to undo the new requirement, the Chamber has asked the OMB to rescind approval of the form. Regulations implementing the Paperwork Reduction Act allow the OMB to do so under various circumstances, including a discovery that the issuing agency’s burden estimates were “materially in error,” the organization said in a letter to that office.

The EEOC estimated that it would cost employers about $53.5 million to comply with the mandate; the Chamber has argued that the number is actually around $400 million. “[The] OMB must either rescind its approval of the EEOC submission or stay the effectiveness of its approval until the EEOC acknowledges the actual burden and justifies its imposition pursuant to the requirements of law,” the organization wrote.

Two key Republican senators sent a similar letter in April. For more information, see Business Groups to White House: Block New EEO-1 Pay Reporting Requirements.

The OMB did not respond to a request for comment.

House Hearing

Olson, a partner at Seyfarth Shaw, repeated the Chamber’s concerns at the May 23 House Education and Workforce Committee subcommittee hearing titled “The Need for More Responsible Regulatory and Enforcement Policies at the EEOC.”

“The revised EEO-1 form is a substantial new recordkeeping obligation that will, in fact, do nothing to ensure equal pay for substantially equal work while at the same time siphoning employer resources from … actively performing meaningful compensation audits and then acting upon those results,” she said.

A representative for the Society for Human Resource Management (SHRM) agreed. “SHRM is concerned that the revised EEO-1 report will not prove useful in achieving the objective of curtailing compensation discrimination while at the same time being administratively burdensome,” according to Lisa Ponder, Vice President and Global HR Director for MWH Constructors, Inc.

Other EEOC Initiatives

Lawmakers and witnesses also took aim at other EEOC priorities, including the commission’s recent focus on rooting out systemic discrimination. Rep. Bradley Byrne (R-AL), chair of the Subcommittee on Workforce Protections, said the commission has a “misguided focus on fishing expeditions” and should, instead, use its resources to address actual claims received. Investigators are looking for discrimination that may or may not exist, he said, while at the same time, the EEOC has a massive backlog of actual complaints. (See EEOC Slows Enforcement, But Makes Headway on Backlog.)

Olson agreed. The commission’s focus on systemic discrimination incentivizes investigators to take aggressive approaches when evaluating charges at the expense of targeted investigations and prompt resolutions of individual charges, she said.

Congress has in recent years held similar hearings on the EEOC’s actions but Byrne said he is hopeful that change may be possible now. “With a new Congress and a new administration we have an opportunity to move the EEOC in a new direction,” he said.

Praise for the Commission

Some, however, disagreed with the hearing’s premise that the EEOC needs to change direction.

Rep. Mark Takano (D-CA), the subcommittee’s ranking member, said Congress needs to empower the EEOC to continue the work it’s doing. Todd A. Cox, Director of Policy of the NAACP Legal Defense and Educational Fund, agreed. “While individual claims have a place in the commission’s docket, it is imperative that the EEOC continue to maximize its impact by prioritizing systemic enforcement in litigation,” he said. That focus allows the EEOC to address and remedy workplace discrimination on a large scale, according to Cox.

Takano also expressed particular support for the revised EEO-1. “If we don’t have accurate data, we won’t be able to resolve this persistent problem,” he said. Takano acknowledged that the form won’t eliminate pay discrimination on its own, but said it’s an important step toward doing so.

Kate TornoneKate McGovern Tornone is an editor at BLR. She has almost 10 years’ experience covering a variety of employment law topics and currently writes for HR Daily Advisor and Before coming to BLR, she served as editor of Thompson Information Services’ ADA and FLSA publications, co-authored the Guide to the ADA Amendments Act, and published several special reports. She graduated from The Catholic University of America in Washington, D.C., with a B.A. in media studies.