DOL Issues Notice of Proposed Rulemaking Requiring Equal Pay Report

by Ballard Spahr LLP
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The U.S. Department of Labor (DOL) recently issued a Notice of Proposed Rulemaking to amend the regulations implementing Executive Order 11246, which addresses affirmative action requirements for federal contractors and subcontractors. The proposed rule requires covered federal contractors and subcontractors to submit annually an “Equal Pay Report” to the Office of Federal Contract Compliance Programs (OFCCP) that provides summary information on employee compensation.

Only a subset of federal contractors and subcontractors (collectively, “contractors”) subject to Executive Order 11246 are covered by the proposed new regulation. Contractors are covered if they file an EEO-1 report; have more than 100 employees; and have a contract, subcontract, or purchase order of $50,000 or more covering a period of at least 30 days, including modifications.

The proposed rule includes a sample Equal Pay Report. The form requires contractors to provide total W-2 earnings for all employees employed during the calendar year organized according to EEO-1 job category, race, ethnicity and sex, along with the total number of employees and total hours worked by employees in each category. Specifically, the Equal Pay Report requires:

  • Total number of workers in each EEO-1 job category by race, ethnicity, and sex
  • Total W-2 earnings for all workers in the job category by race, ethnicity, and sex
  • Total hours worked by all workers in the job category by race, ethnicity, and sex

The OFCCP will use the data collected from the Equal Pay Reports, along with other relevant data, such as labor market survey data, to generate objective industry standards regarding compensation. The OFCCP then intends to select for compliance evaluations employers whose Equal Pay Report data diverges from the industry standards. Equal Pay Report data alone will not be used to determine violations. Rather, any resulting compliance evaluation will analyze specific data and any nondiscriminatory factors that may affect pay differentials, such as employee educational levels or disparate job skills.

The OFCCP also intends to publish the industry standards to encourage voluntary efforts to reduce the pay differentials between men and women and between employees on the basis of race and ethnicity. The OFCCP may publish aggregate Equal Pay Report data without revealing a particular establishment or individual’s pay data. The agency stated in the proposed rulemaking that it intends to protect the confidentiality of individual Equal Pay Reports to the maximum extent permissible by law. It remains to be seen whether requests for such data under the Freedom of Information Act will result in disclosure.

The OFCCP has proposed March 31 as the deadline for filing the Equal Pay Report, which will be filed electronically. The current penalty provisions of the applicable regulations will be extended to contractors who fail to file Equal Pay Reports in a timely manner, who file incomplete or inaccurate Equal Pay Reports, or who violate the disclosure requirements when bidding on federal contracts.

Comments on the proposed rule are due on or before November 6, 2014. The Advanced Notice of Proposed Rulemaking on this subject, during which the DOL received 7,800 comments, suggests that the proposed rule will be controversial and generate substantial public comment.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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