DOL Proposes New Equal Pay Report for Federal Contractors
On August 6, 2014, the U.S. Department of Labor issued a proposal to collect summary data on how federal contractors and subcontractors pay their employees. The proposed rule comes in response to President Obama’s April 8, 2014 directive instructing the Secretary of Labor to propose a rule within 120 days to collect summary compensation data from federal contractors and subcontractors. The Notice of Proposed Rulemaking is open for public comment until November 6, 2014.
The purpose of the Equal Pay Report is to allow the Office of Federal Contract Compliance Programs (“OFCCP”) to collect summary employee pay and demographic data using existing government reporting frameworks. Under the proposed rule, certain federal contractors and subcontractors would be required to submit an annual Equal Pay Report, similar to the EEO-1 report, on employee compensation to the OFCCP.
Specifically, under the terms of the proposed rule, this requirement would apply to companies that file EEO-1 reports, have more than 100 employees, and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days. In other words, if you have 100 or fewer employees, and/or if you only have very short-term contracts, the requirement would not apply to you.
As written, covered employers would submit electronically three pieces of information related to employee compensation:
- The total number of workers within a specific EEO-1 job category by race, ethnicity and sex;
- Total W-2 wages defined as the total individual W-2 wages for all workers in the job category by race, ethnicity and sex; and
- Total hours worked, defined as the number of hours worked by all employees in the job category by race, ethnicity and sex.
Notably, the Equal Pay Report would not collect any individual pay information, or any information on factors such as education or experience that may affect pay. Furthermore, the report would be based on the same employees counted in the EEO-1 Report. Similar to the EEO-1, the information would be submitted for each location, including the company’s headquarters, but no consolidated report is required.
The OFCCP would then compare the wage data between industries to target lower paying contractors for compliance reviews. They anticipate publishing the results by industry so contractors can compare their own rates with their industry peers. The OFCCP insists that it will not use the data to bring any sanction or adverse action against a contractor for compensation discrimination, but will use it as a way to target contractors for compliance reviews.
The proposed rule suggests that the Report would be due by March 31 each year, by which time employers should have all W-2 information from the prior year available.
What do you do now?
If the prospect of submitting this information troubles you, we recommend submitting comments to the OFCCP. Such comments are one of the few ways to combat the continued imposition of new, burdensome requirements on federal contractors and subcontractors. If you do not take a stand now, you will be stuck with these obligations for the indefinite future.
Ultimately, whether the regulations are published in their current form, or with some revision, it will likely be several years before contractors will have to submit the Equal Pay Report. As always, we will keep you apprised of any developments.