Thawing the Frozen Obama-Era Disclosure Requirements: Federal Judge Rules Gender Pay Reporting May Be Mandated This Spring
In the summer of 2016, just prior to President Obama leaving office, the Equal Opportunity Commission (EEOC) finalized new pay disclosure requirements that mandated companies employing more than 100 people report wage data by sex, race, and ethnicity to the US government. However, the Office of Management and Budget (OMB) froze the expanded requirements when President Trump took office in 2017.
Looking to reinstate the expanded Obama-era disclosures, the National Women’s Law Center (NWLC), among other groups, sued the US government. On March 4, Federal Judge Tanya Chutkan agreed with the NWLC and ruled the US government did not properly justify its decision to freeze the EEOC’s 2016 mandate. It is not clear whether OMB will appeal this decision or whether companies will be forced to comply with the original reporting deadline of May 31.
Judge Chutkan’s ruling reflects the increasing global pressure for large companies to demonstrate the equitable nature of their pay practices. For example, last year, most large US banks, responding to shareholder pressure, released modified information on gender pay gaps.
“This is part of a real cultural shift we’re seeing around transparency in pay,” stated Emily Martin, vice president for education and workplace justice for the NWLC. Martin further noted, “In order to have equal and fair pay, employees need more information about their employers’ pay policies…so this is one step, but it’s not the last step.”
In strong opposition to the expanded reporting, the US Chamber of Commerce estimated the expanded reporting would cost businesses more than $400 million annually. The EEOC argues the number is closer to $53 million.
Even though the information collected by the EEOC would remain confidential, research suggests gender pay gaps can shrink based solely on the requirement to measure them. A recent study conducted in Denmark demonstrated that requiring companies with over 35 employees to report pay data by gender shrunk the gender pay gap by 7 percent.
We will continue to monitor developments in this changing landscape and provide updates as the issue becomes more clear.
If you have any questions regarding the content of this alert, please contact Ryan Altieri, law clerk, at email@example.com, or another member of the firm’s Labor & Employment Practice Area.