Protests Over Race Raise Stakes for Business Pay-Data Collection

Federal regulators are feeling the pressure from civil rights groups as advocates use the Black Lives Matter protests to bolster arguments that employers’ pay data is necessary to end systemic racial inequities in the workplace.

Collecting the information is an essential step in efforts to close race and gender pay gaps, and also would allow the federal government to survey the many businesses that have pledged to address racial inequities since George Floyd’s death in police custody in late May, civil rights and worker-focused advocates say.

“That data would help show us the difference between a PR statement and reality,” said Maya Raghu, director of workplace equality and senior counsel at the National Women’s Law Center.

But the future of employer pay-data reporting is uncertain. The federal government’s past attempt to require businesses to provide pay information as part of an annual workforce diversity data survey known as the EEO-1 was marked by policy reversals and litigation. And the process has since taken a new turn as the protests have gripped communities across the nation.

The Equal Employment Opportunity Commission, the federal agency policing workplace civil rights law, announced in recent weeks that it plans to study worker pay information that was collected in fiscal 2017 and 2018 pursuant to a court order, in addition to advancing a rulemaking. Earlier in the Trump administration, the White House nixed a requirement for employers to hand over pay data broken down by race and gender.

‘Appropriate’ Rulemaking

EEOC Chair Janet Dhillon has not stated a clear goal for the agency’s regulatory proposal, which is slated for release in September, but advancing a rulemaking in the final months of a presidential election year is inherently challenging.

“As the Chair has stated publicly, the Commission will take up the issue of the collection of pay data through an appropriate rule making process,” agency spokesperson Kimberly Smith-Brown said in an emailed response to a question about next steps.

When asked about whether the protests have influenced the agency’s thinking, Smith-Brown said the plans predate “the recent attention to the issue.” Dhillon, in fact, said during her confirmation hearing in 2017 that she’d address some form of pay data collection.

“Additionally, while racial inequities in pay have been discussed recently in relation to the Black Lives Matter movement the Commission has done significant enforcement work in this area for many years,” Smith-Brown said.

The EEOC first introduced the idea of a pay-data reporting requirement for employers during the Obama administration, prompting immediate outcry from businesses. Mandated reporting places an undue burden on employers and hasn’t proven to be effective, business groups and management-side attorneys contend.

Developments on Capitol Hill last week highlighted the controversy’s political dimension, a factor that could complicate future action. The Democratic-led House Appropriations Committee included report language in a spending bill covering the EEOC that would require the agency to devise new plans for collecting the data from employers, as well as analyzing prior-year statistics that have already been reported, and for publicizing the results.

The spending bill is unlikely to become law in its current form. However, the report language shows congressional Democrats would likely be keen to revisit the issue if the November presidential election results in a change in administration.

Moving forward with pay data collection in some form is important because it provides regulators with a necessary tool for preventing systemic workplace discrimination “against women, people of color, and all other disenfranchised groups,” said Shirley Wilcher, executive director of the American Association for Access, Equity, and Diversity.

Wilcher led the Labor Department’s Office of Federal Contract Compliance Programs during the Clinton administration. The subagency reviews federal contractors’ workforce pay data for anti-discrimination enforcement purposes. She said having information about how workers are paid according to race is extremely important, both in gauging inequities at individual workplaces and across industries.

Past Litigation

The Trump administration triggered a contentious courtroom battle when it halted the Obama administration’s proposed pay reporting requirement for businesses in 2017, leading the National Women’s Law Center and the Labor Council for Latin American Advancement to sue the EEOC and the White House.

The civil rights groups won the lawsuit—a judge for the U.S. District Court for the District of Columbia ruled in 2019 that the EEOC and the White House didn’t provide a valid explanation for scrapping the reporting requirement.

Judge Tanya Chutkan’s decision mandated a one-time collection of the pay data for fiscal years 2017 and 2018. It is this data set that will now be analyzed by the National Academies of Science, Engineering and Medicine.

The EEOC’s announcement that it commissioned the National Academies to study the data could be a move to deflect criticism the agency has received for discontinuing the Obama-era version of the collection, said Rae Vann, a shareholder with Carlton Fields, who advises employers on workplace compliance and policy.

It also could be a way “to determine whether there is any objectively meaningful utility in the data from a discrimination enforcement perspective—about which the business community has raised serious doubt,” she said.

But business groups aren’t against all forms of pay data collection. In an October public meeting on the topic, some employer representatives even proposed alternatives to the Obama-era model.

The National Academies report isn’t anticipated to be completed until the end of 2021, a timeline that also raises questions. The timeline “suggests that they don’t expect anything immediate to come of this,” said Lawrence Lorber, a former Labor Department official and current management-side counsel for Seyfarth Shaw.

The agency in May delayed collection of the annual EEO-1 report—a wider survey that includes employer information on race, sex, and job category—until 2021, citing the “unique and urgent” issues businesses face during the coronavirus pandemic. The agency will collect 2019 and 2020 data once the larger collection resumes, but pay data will not be part of the EEO-1 report.

Uncertain Future

If Democrats win the White House, businesses should expect the next administration to prioritize a new form of pay data collection, “but perhaps in a more thoughtful form” informed by the National Academies’ report, Lorber said.

The Obama-era form of pay data collection used W-2 wage info. Employer associations said this method resulted in an inaccurate representation of total pay, because workers can influence that number through actions such as 401(k) deferrals.

Employer groups may also try to renew their argument that the collection methodology was inherently flawed, so there can’t be any sort of valid interpretation of the data, Lorber said.

“The debate always occurs on the issue of the reporting burden and the relative utility of the data, but I believe we can achieve a balance,” Wilcher said.

At the same time, state and local civil rights agencies contend the EEOC has limited their access to the larger set of diversity data collected through the EEO-1 each year. Some management attorneys speculate this conflict could set up the next round of pay-data-related litigation, regardless of how the National Acadamies’ report and the EEOC rulemaking play out.

Workplace civil rights groups “weren’t shy” about suing the agency in the past, Vann said: “I can’t imagine they would step away now.”