In a ruling hailed as a win for pay transparency and panned as a major headache for companies, a federal judge gave the green light to workplace regulators to ask companies about their employees’ salaries. The move is designed to help regulators identify pay gaps for women and minorities.
After years of studying the issue, the U.S. Equal Employment Opportunity Commission (EEOC) was poised to make companies with at least 100 workers start revealing pay information on top of their standard reporting about race, sex, ethnicity and job titles. However, the Office of Management and Budget (OMB) put a stay on the new requirements in August 2017.
On Monday, Washington D.C. federal judge Tanya Chutkan said the OMB was wrong to arbitrarily pause the data collection effort — especially because the OMB gave a green light to regulators to ask companies these pay questions in 2016.
According to Chutkan, the agency didn’t give a sufficient reason for its actions. The OMB premised its stay mainly on worries about how companies would submit the new information, but Chutkan said the position “rests on hyper-technical formatting changes that have no real consequences for employers.”
The EEOC and the OMB didn’t immediately respond to requests for comment.
The 41-page decision deals with the ways government rules are established and stopped, but it’s linked to big picture questions about pay gaps for women and minorities, compared to white men.
Women working full-time in 2017 had median weekly earnings that were 82% of their male counterparts, up from the 62% women earned compared to men in 1979, according to the Bureau of Labor Statistics. Hispanic and black workers in 2017 “continued to have considerably lower earnings” than white and Asian-American workers, the agency noted.
Of course, disparities can cut various ways. For example, Google GOOG, -0.36% said earlier this week it was adjusting the salaries of an unspecified number of male workers because their pay wasn’t in line in with female colleagues.
The EEOC previously said it expected to publish reports on pay discrepancies. Without the stay, the first reports would have been released in March 2018.
Chutkan said the OMB’s past approval of the data-collection efforts “shall be in effect.” But the ruling could be appealed.
Sunu Chandy, legal director of the National Women’s Law Center, told MarketWatch the ruling was a clear-cut win.
“Allowing more pay data transparency is quite likely to lead to greater civil-right enforcement because you have more information,” Chandy said.
The requirements would also give companies an opportunity to address issues with a “self-audit,” according to Chandy, who was an EEOC attorney earlier in her career.
“You might fix it before you report it. If you have to show that to a civil-rights agency, you might think twice before you say, ‘That’s just how it is,’ ” she said.
Her organization and the Labor Council for Latin American Advancement were the ones to sue the Trump administration over the stay. The organizations were represented by attorneys at the National Women’s Law Center and lawyers at Democracy Forward, a nonprofit created in 2017 to “expose corruption in the executive branch,” the group’s website says.
For Chandy, the win also “holds this administration up to the rule of law.” The pay-data collection rules were crafted after years of deliberation during the Obama administration, and while the Trump administration might take a different stance, the decision made it clear officials “needed to at least justify the changes and go through proper procedures.”
The EEOC once estimated that supplying the extra information would cost companies another $416 when they filed their paperwork. But the U.S. Chamber of Commerce blasted it, saying that price was a major low ball for a reporting expense that could run into the millions of dollars.
Marc Freedman, vice president, workplace policy in the U.S. Chamber of Commerce’s Employment Policy Division, said the ruling “eviscerates” the Paperwork Reduction Act’s “appropriate goal of making sure agencies impose the least amount of paperwork burden on employers.
The Chamber vigorously opposed EEOC’s revised form collecting the pay data, arguing that increased the burden on companies “while not helping to identify pay discrimination.” Freedman said the EEOC “grossly underestimated the burdens and costs of the revised form, without demonstrating any utility.”
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