The Equal Employment Opportunity Commission (EEOC) has announced its intention to revisit a rule requiring companies to disclose employee pay data, a move that is expected to encounter a significantly altered legal and compliance landscape compared to its initial attempt in 2016. The agency’s previous endeavor was halted by the Office of Management and Budget under President Trump, only to be briefly revived in 2019 after civil rights groups secured a court order. However, it was voluntarily discontinued shortly after.
This time, the EEOC plans to approach the regulation through the Administrative Procedure Act (APA) rulemaking process rather than the Paperwork Reduction Act, indicating a shift towards a more formal notice-and-comment regulatory framework. This strategy could make the new rule more vulnerable to litigation, especially in light of recent judicial shifts. The U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raimondo has heightened the difficulty for federal agencies to prove their statutory authority to issue specific regulations, potentially setting the stage for employer groups to challenge the EEOC’s authority under Title VII of the 1964 Civil Rights Act.
Victoria Lipnic, a former acting chair of the commission and current partner at Resolution Economics, noted that the Loper Bright decision “makes the outcome and whether regulations or guidance from agency will stand much more uncertain.” The EEOC is expected to argue that Section 709(c) of Title VII grants them the authority to collect such data, although the statute does not explicitly refer to pay information.
Employers and legal professionals should prepare for the possibility of increased regulatory requirements, while also considering the evolving judicial landscape that may provide opportunities to challenge the new rule. Advocates for pay equity argue that the landscape has shifted favorably towards transparency, pointing to state-level requirements in places like California and Illinois as precedents. Indeed, Vasu Reddy, director of state policy for workforce justice at the National Women’s Law Center, emphasized that the opposition often stems from fears of a regulatory burden rather than the actual impact.
As the EEOC moves forward, adjustments based on previous experiences and studies, like the one conducted by the National Academies of Sciences, Engineering, and Medicine, may aim to alleviate compliance difficulties and improve data accuracy. Nevertheless, even companies that participated in the initial collection cycle may find re-engaging with this requirement to be challenging due to organizational changes and the need for robust data management systems.
The legal community will be closely watching how the EEOC balances the necessity of collecting pay data with the practical challenges faced by employers. As Michael Eastman of the Center for Workplace Compliance noted, many employers do not analyze pay in the way the EEOC’s proposed rule might require, posing significant hurdles for compliance.
For a comprehensive analysis of the upcoming challenges faced by the EEOC in its second attempt at pay data collection, refer to the full article here.