The EEOC published its revised proposal for the new EEO-1 report today. The revised proposal came after extensive, and polarized, comments on the EEOC’s prior proposal this Spring. The prior proposal revised the existing EEO-1 report to require disclosure of data on pay ranges and hours worked in addition to the already required reporting on workforce profiles by race, ethnicity and gender. The revised proposal released today still requires reporting of this data. The EEOC has not changed course on its plan to use the data to identify discriminatory pay practices and target companies for investigations and class action equal pay lawsuits – without having to identify an injured party plaintiff. The primary change in the revised proposal is that the first date by which employers will have to submit the new EEO-1 report has been moved from September 2017 to March 31, 2018. In addition to allowing more time for employers to prepare for the new report, the EEOC made this change to simplify reporting by allowing employers to use existing W-2 data from the 2017 calendar year for the 2018 report. The EEOC also provided options for calculating “hours worked” for exempt employees, and will not require employers to collect hours worked for exempt workers if they do not already track those hours.
The Equal Employment Opportunity Commission (EEOC) has published a new rule in the Federal Register that will more than double the monetary penalty for employers that violate the notice-posting requirements of Title VII and other nondiscrimination statutes. Click here to view the rule on the Federal Register’s website.
Effective July 5, 2016, the maximum penalty for violating the notice posting requirements will be $525 per violation, a substantial increase from the previous penalty of $210 per violation.
It’s been a busy and, let’s say notable, week in the area of employment law. Here’s a quick recap, with more to come in future posts, of what you may have missed if you were focused elsewhere this week.
First, OSHA published a new injury Rule this week. While it does not take effect until January 1, 2017, employers should not wait until then to begin thinking about what changes may be necessary to ensure full compliance in the new year. The rule changes create a new cause of action for employees if they suffer retaliation for reporting a workplace injury, and employers are expected to ensure that policies addressing safety do not discourage employees from reporting such injuries. Large employers will also have some additional reporting requirements to OSHA. And, significantly, and in line with the current administration’s agenda of transparency, OSHA will begin making injury data accessible to the public, after removing any personally identifiable information regarding employees. That’s just a summary, with more to come in a future blog post. Stay tuned.
Second, did you hear that President Obama signed into law the Defend Trade Secret Act of 2016? Yes, that’s right, claims for trade secret misappropriation are not just limited to what the applicable state law provides. The new law creates a federal cause of action for the theft/misappropriation of trade secrets that are “related to a product or service used in, or intended for use in, interstate or foreign commerce.” The law also creates a new mechanism for a court to order the civil seizure of property, ex parte, if an employer can meet certain stringent standards for such an order.
Third, not to be overshadowed by either the President or OSHA, the EEOC published its own resource document this week regarding employer duties to provide leave as a reasonable accommodations in the workplace. While the new resource tracks what the EEOC has been saying for many years (or what we, as employment attorneys, know from tracking EEOC litigation and publications), the new resource delves a little deeper into how employers should be analyzing an employee’s request for leave and may be a helpful resource for employers who may still be under the mistaken impression that simply applying a leave policy (or workplace rule) the same to everyone is acceptable under the ADA (hint: we know that employers must modify policies for individuals with a disability if doing so could be a form of reasonable accommodation). Our mantra of no more “automatic termination” policies can no longer be ignored. This is serious stuff. Lots more to come on this topic.
Fourth, the EEOC was also busy issuing a new fact sheet on bathroom access for transgender employees. The fact sheet is brief, essentially reciting the few decisions issued on the topic, and reiterating for employers that transgender employees must be permitted to use the bathroom that corresponds with their gender identity (not biological sex) and cannot be conditioned on an employee having undergone reassignment surgery. Also, employers beware, providing a separate, single-user bathroom for a transgender employee is a form of discrimination (although you can provide a single-user bathroom for use by all employees). A transgender employee must have equal access to the common bathroom that corresponds with their gender identity, regardless of whether it makes other employees uncomfortable.
These are just a few of the many things that happened this week. Stay tuned for further analysis on these topics and more (including the much-anticipated DOL overtime regulations that could be published as early as next week).
On the seventh anniversary of the federal Lilly Ledbetter Fair Pay Act, the Equal Employment Opportunity Commission (“EEOC”), in partnership with the U.S. Department of Labor, Office of Federal Contract Compliance Programs (“OFCCP”), announced a proposed rule to collect data from employers that will be used to identify discriminatory pay practices. Under the proposed rule, companies with 100 or more employees, both private employers and federal contractors, would be required to report wages from W-2 earnings and total hours worked for all employees by sex, race, and ethnicity within a 12-month period. It is projected that these new proposed requirements will affect over 63 million employees.
This proposed rule is now in the comment period until April 1, 2016. The EEOC also plans to conduct a public hearing regarding the new rule at some point. If things progress as expected, this rule becomes effective for the September 30, 2017 reporting period.
While the EEOC highlights that the proposed rule also is a benefit to employers because it assists employers “in evaluating their pay practices to prevent pay discrimination” and to avoid enforcement actions, there are legitimate concerns regarding how such data will be interpreted and used by government agencies. Some concerns include the strong likelihood of this data producing false positives and the ability to keep this information confidential.
Currently, the EEO-1 form collects data regarding the number of employees, along with their sex, race and ethnicity, in 10 specifically designated job categories. Under the proposed rule, an employer also would be required to report the number of employees by their sex, race, and ethnicity, within 12 specified pay bands in each of the 10 job categories. These pay bands track the 12 pay bands used by the Bureau of Labor Statistics in the Occupation Employment Statistics survey. The specific pay bands are:
- • $19,239 and under;
- • $19,240 – $24,439;
- • $24,440 – $30,679;
- • $30,680 – $38,999;
- • $39,000 – $49,919;
- • $49,920 – $62,919;
- • $62,920 – $80,079;
- • $80,080 – $101,919;
- • $101,920 – $128,959;
- • $128,960 – $163,799;
- • $163,800 – $207,999; and
- • $208,000 and over.
The proposed new section of the EEO-1 form is available on the EEOC’s website (click here).
The pay data will be taken from employees’ total W-2 earnings for a 12-month period looking back from a pay period between July 1st and September 30th. The EEOC believes the benefit to using W-2 earnings is that it includes total earnings, including wages, salaries, and other compensation such as commissions, tips, taxable fringe benefits, overtime pay, shift differentials and bonuses. Also, the EEOC insists that using W-2s places the least amount of burden on an employer because this information is already gathered and most human resources information systems allow for calculations for any 12-month period, not just the calendar year.
A concern for employers is that there is no way to indicate on the EEO-1 form neutral factors, such as experience, education, or performance that might account for or explain any pay differentials. Accordingly, it is anticipated that this data may produce many false positives which will force employers to exert additional time and resources to defend their pay practices.
Total Number of Hours Worked
Under the proposed rule, an employer would also have to record the total number of hours worked by employees, broken down by sex, race, and ethnicity, in each pay band. The EEOC states that the reason for providing the number of hours worked is to take into account part-time or partial-year employees. Specifically, data on number of hours worked “will allow analysis of pay differences while considering aggregate variations in hours.”
As the rule is currently drafted, it is unclear how this information will achieve that purpose when it does not take into account factors which could skew results such as overtime hours, or other supplemental earnings like bonuses or commissions, which may be less due to part-time work. Another issue not addressed by the EEOC is how hours for salaried employees would be calculated. In fact, the EEOC acknowledges that it is not certain how to report hours worked for salaried employees and is requesting employer input on that issue.
The EEOC states that it plans to use the pay data to: (1) assess complaints of discrimination; (2) focus agency investigations; and (3) identify existing pay disparities that may warrant further examination. The agency claims the information from the pay bands will be used to “compute within-job-category variation, across-job-category variation, and overall variation” to discern potential discrimination. The EEOC plans to develop statistical tools for staff to use on their computers so that they can conduct this type of analysis. The EEOC will also publish aggregate data so that employers can conduct their own analysis of their pay practices
Yet, the EEOC has not identified what statistical methodology it plans to use. Thus, it is not possible to assess whether the EEOC’s statistical analysis would hold up under judicial scrutiny or would be rejected by the courts.
The EEOC does not guarantee that the pay data will be kept confidential and not subject to FOIA requests through both the EEOC and the DOL. Specifically, the EEOC states that Title VII forbids it from making public the EEO-1 data before a Title VII proceeding is instituted. As for OFCCP, it promises to keep the EEO-1 data confidential “to the maximum extent permitted by law, in accordance with the Freedom of Information Act Exemption 4 and the Trade Secret Act.”
The EEOC attempts to counter any confidentiality concerns by claiming that since the data is provided in the aggregate and not on based on individual employees, there is no confidentiality issue. Aside from the fact that it’s really more of a privacy issue, that response underplays the importance that the compensation data could provide to competitors and ignores the free discovery that it would provide to the plaintiff’s bar by allowing access to this pay data.
Given the complexity of defending discriminatory pay claims, in preparation of the enactment of this new rule employers should conduct pay equity analysis to assess any issues prior to submitting any pay data. Additionally, companies affected by the proposed rule may wish to consider submitting comments.
The EEOC, and at least some Plaintiffs’ lawyers, are taking the position that employers may not offer more parental leave to a birth mother than to a father, unless justified by medical necessity. Any other outcome, they claim, would constitute discrimination against men on the basis of sex.
This Summer (on June 25, 2015), the Equal Employment Opportunity Commission issued the EEOC Enforcement Guidance on Pregnancy Discrimination and Related Issues on June 25, 2015. The EEOC’s new guidance states that any parental leave must be provided to similarly situated men and women on the same terms. Further, according to this guidance, companies may offer longer leaves to biological mothers than to fathers, only if the difference in length of leave is justified by a medical necessity. The EEOC gives the example of the following policy that complies with Title VII: offering “pregnant employees up to 10 weeks of paid pregnancy-related medical leave for pregnancy and childbirth as part of its short-term disability insurance” and allowing all new parents six weeks of parental leave. The EEOC states that this policy gives an equal amount of parental leave and allows women who give birth an additional 10 weeks to recover from pregnancy and childbirth. Although one may question whether this adds clarity or confusion to the issue, it appears that the EEOC is attempting to carve out a “medical necessity” exception to a rule that otherwise requires uniform treatment.
At least one high profile employer has had to deal with a claim of discrimination along the lines suggested by the EEOC. Last month, CNN and Turner Broadcasting settled an Equal Employment Opportunity Commission (“EEOC”) charge with a former CNN correspondent, Josh Levs, who claimed that the company’s paid parental leave discriminated against biological fathers. According to Mr. Levs, CNN’s parental leave policy provided biological fathers only two weeks of paid parental leave and allowed ten weeks of paid leave for biological mothers, as well as to all parents (regardless of sex) who adopted. In October 2013, Mr. Levs filed a charge of discrimination alleging that CNN’s policy violated Title VII of the federal Civil Rights Act. The settlement between the parties was not disclosed, but Time Warner voluntarily changed their parental leave policy to allow all parents—biological mothers, biological fathers, and adoptive parents—to receive six weeks of paid leave following childbirth or adoption. In addition, the new policy allows biological mothers to receive an additional six weeks of leave with the possibility of more leave if they have an unforeseen medical need.
What is the bottom line for employers? Employers should review their leave policies to ensure that they are compliant with Title VII, including by looking for unintended negative impact from policies that were designed to be generous to new mothers. As outlined by the EEOC, employers should consider distinguishing in their leave policies parental leave that is related to a physical limitation imposed by pregnancy or childbirth and leave that is provided for the purpose of caring or bonding with a child.
Join our friends on the California HR team on Wednesday, July 30, from 10:00 – 11:00 a.m. Pacific (1:00 p.m. Eastern), as they provide a complimentary one-hour webinar on current hot topics that may impact employers not just in California, but also nationwide, as they deal with Federal agency enforcement plans.
Kate S. Gold, Partner, Labor & Employment
Bruce L. Ashton, Partner, Employee Benefits & Executive Compensation
Philippe A. Lebel, Associate, Labor & Employment
Ryan C. Tzeng, Associate, Employee Benefits & Executive Compensation
Date: Wednesday, July 30, 2014
Time: 10:00 a.m. Pacific (1:00 p.m. Eastern)
Location: Webinar (Dial-in details and Outlook calendar link will be sent with registration confirmation)
Topics to be discussed during the one hour webinar will include:
- The EEOC’s Strategic Enforcement Plan and its impact on employment separation agreements and releases
- What the DOL and IRS are looking for when they audit your retirement plan… and what you should do about it
- The Department of Labor’s modernization of the FLSA overtime exemptions
- Strategies for surviving a DOL investigation or IRS audit of your retirement plan
- The National Labor Relations Board’s focus on employee rights to engage in concerted activity, and the impact on employer confidentiality agreements, social media policies, and arbitration agreements
There will be an opportunity at the end of the program to ask questions.
*CLE Information: This program has been approved by the California State CLE Board for 1.0 substantive credit hour.
Questions? Please contact Liz Jutila at Liz.Jutila@dbr.com