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Employers Watching for EEOC Action on Pay Data, Other Policies

Dec. 27, 2022, 10:15 AM

Employers are anticipating a federal pay data reporting requirement in 2023 as the makeup of the US Senate shifts, potentially placing another Democrat on the EEOC and tipping the balance of the workplace civil rights agency.

Democrats held the Senate in the midterm elections, meaning President Joe Biden’s nominee for a vacant seat on the five-member US Equal Employment Opportunity Commission could advance through the confirmation process in 2023. That would give Democrats control of the agency, which employers expect they’ll use to enact a pay data reporting requirement to address persistent gender and race wage gaps.

“It’s at the center of everybody’s bingo card,” said Marc Freedman, the US Chamber of Commerce’s vice president for employment policy.

Biden failed in 2022 to get Senate confirmation of his nominee to fill a vacant seat on the commission, civil rights attorney Kalpana Kotagal. If she’s confirmed in 2023, the EEOC would have a Democratic chair, Charlotte Burrows, and a Democratic voting majority for the first time since 2016, allowing the agency to move forward on several progressive priorities.

“I expect that they have two years of pent-up demand here to actually go out and do a bunch of other things,” said Robert O’Hara, a partner at Epstein Becker Green PC. “My expectation as a practitioner in this area, is that they will be pushing a lot of agenda items they haven’t been able to thus far.”

Eyeing Compensation Data

A pay data collection requirement, “once there are three solid votes in favor of that, will be a priority,” said Victoria Lipnic, a former Republican EEOC commissioner.

The commission in 2017 and 2018 required employers for the first time to submit pay data broken down by race, sex, ethnicity, and job category. The pay data collection was added as a “Component 2" of the EEOC’s annual diversity report, known as the EEO-1.

The agency commissioned the National Academies of Sciences, Engineering, and Medicine to analyze the quality of that worker pay data and how to potentially collect that information in the future. The nearly 300-page report released in July didn’t offer one simple recommendation for moving forward, but generally concluded that, though pay data is a useful tool in preventing discrimination, the way the EEOC previously collected it was flawed.

Business groups have argued that the pay data reporting requirement would be expensive and burdensome for companies. So the report recommended that the EEOC combine collection of Component 2 data and Component 1 data, which is workforce demographic data that employers with over 100 workers already submit each year.

Burrows said in July that the study “confirmed what we at the EEOC have long known—collecting and analyzing pay data can be a useful tool in preventing and combating pay discrimination in American workplaces.” Republican commissioners and employers have said whatever the agency chooses to do should go through the rulemaking process and include their input.

Burrows may also choose to prioritize updating the EEOC’s sexual harassment guidance and issuing formal guidance on LGBTQ discrimination.

The EEOC published a technical assistance document in June 2021 interpreting the scope of the US Supreme Court’s Bostock v. Clayton County decision, which extended LGBT worker protections under Title VII of the 1964 Civil Rights Act, to also protect their use of pronouns and bathroom facilities that don’t correspond with their gender assigned at birth. A Texas federal judge ruled in October that doing so was beyond the scope of Bostock.

Republican commissioners criticized Burrows for unilaterally publishing the technical assistance document without a commission vote. But with a Democratic majority, Burrows could address the issue through a formal guidance document voted on by the commission.

“My guess is that’s why they weren’t putting it in front of the full commission, because they didn’t have the votes,” O’Hara said.

Changing Dynamic

Burrows became EEOC chair in January 2021. But Democrats have been in the minority for most of that time, curtailing her power to set the commission’s agenda.

Republican Former EEOC Chair Janet Dhillon’s term expired in July, but she was able to hold on to the seat until the end of the year absent a Senate-confirmed nominee to replace her. She resigned from the post in November, leaving a 2-2 partisan split on the commission: Burrows and fellow Democrat Jocelyn Samuels, and Republicans Keith Sonderling and Andrea Lucas.

The EEOC has failed to publish a regulatory agenda in the past two years, a requirement the civil rights agency previosuly hadn’t missed since 1994. When it failed to pass the playbook by majority vote last year, Republican commissioners said it was due to a disagreement over the timing of the EEOC’s updated sexual harassment guidance and employer wellness plan regulations.

As the EEOC’s political makeup changes, the type and number of cases the commission chooses to evaluate also could change. The EEOC’s Republican majority voted in March 2020 to give the commissioners, rather than the general counsel, more power to choose which cases to bring. Before that they had only voted on resource-intensive cases or those pushing novel legal arguments.

Burrows has said the current system is “not efficient.”

However, the current 2-2 split and a Democratic majority would effectively give more litigation authority to the general counsel’s office because under the current rules, a majority of the commission first needs to vote on whether they, rather than the general counsel, should consider the litigation. Republican commissioners have been more keen to vote on routine litigation than Democrats.

“In the absence of the majority of Republicans, that authority is now de facto back in the general counsel’s office,” Lipnic said.

Biden in April nominated civil rights attorney Kotagal to fill Dhillon’s seat. The Senate Health, Education, Labor and Pensions Committee deadlocked on her nomination with a party-line vote in May.

Kotagal—who will have to be renominated in the new year—is unlikely to win over any support from Senate Republicans, who are concerned about what change could come from the agency with Democrats in charge. But they might not need to in 2023, because Democrats hold a wider majority than they did previously.

Burrows’ term expires in July 2023 as well, so a vote to renominate her will have to happen next year, either as a stand-alone or as a package with Kotagal.

To contact the reporter on this story: J. Edward Moreno in Washington at jmorenodelangel@bloombergindustry.com

To contact the editor responsible for this story: Rebekah Mintzer at rmintzer@bloombergindustry.com