Big Data or Big Brother: Another New Employer Reporting Requirement?

As many employers know, many new law and regulations, including the Affordable Care Act, have resulted in increased reporting demands. Recently, the federal government proposed yet another reporting requirement on large employers, resulting in greater review of employer hiring and pay practices.

On Monday, February 1, 2016, the Equal Employment Opportunity Commission (EEOC) published proposed changes to the annual Employment Information Report (“EEO-1 Report”) for all employers subject to the EEO-1 reporting requirement and that have 100 or more employees. Traditionally, this report included demographic information about employees’ race/ethnicity, gender and job categories. Under the proposed changes, the EEOC would require employers to add information about employee pay data and hours worked beginning with the 2017 EEO-1 reporting cycle. This additional information would provide the EEOC and the Office of Federal Contract Compliance Programs (“OFCCP”) with valuable electronic data about large employers’ pay practices and offer rich data sources for claims of discrimination and bases for EEOC and OFCCP examinations and investigations, without complaints from employees. To that end, the proposed rules indicate the EEOC’s intention to develop software that will quickly identify comparative “statistics of interest”. As you can imagine, these automated analytics may result in false determinations of discriminatory practices and costly defense efforts for employers. Yet another issue maybe the hefty burden on employers to gather and present the pay data in wage bands; most HR systems do not collect or report pay data in such formats. This will result, no doubt, in employers putting pressure on their HR information systems to develop new reporting tools.

These proposed changes are available for review and comment until April 1, 2016 on the Federal Register website. An illustration of the data to be collected under the proposed changes can be seen here:

Rest assured, the attorneys and legal team at Clark & Gotzler will continue to keep you apprised of developments with these proposed changes.