The Equal Employment Opportunity Commission (EEOC), in partnership with the Department of Labor, announced controversial proposed revisions to the Employer Information Report (EEO-1) Form. If adopted as proposed, the revisions will materially increase the risks that employers will face pay discrimination claims.

Under the proposed rule, all employers with 100 or more employees who currently submit the EEO-1 Form will be required to add summary pay data to their annual disclosure of data about employees’ gender, race and ethnicity, by job category. This proposed rule replaces an earlier proposed rule by the Department of Labor to require federal contractors to submit similar compensation data in an annual Equal Pay Report to the U.S. Office of Federal Contract Compliance Programs (OFCCP), which was previously slated for finalization in May, 2016.

Beginning on the September 30, 2017, filing deadline, the proposed revised EEO-1 Form will collect data on employees’ total W-2 earnings and hours worked. This compensation and hours data would be reported in 12 pay bands across the 10 EEO-1 job categories, but will not require the reporting of specific salaries of each individual employee. A sample copy of the proposed revised EEO-1 Form to electronically collect compensation data is available on the EEOC website in Section D — Employment Data.

The EEOC and OFCCP would have joint access to the data to conduct statistical analyses for the stated purpose of assessing complaints of discrimination, focusing investigations and identifying employers with existing pay disparities that might warrant further investigation. Additionally, the EEOC suggests that submitting pay data would enable employers to self-assess their pay practices and policies. However, the revised EEO-1 will fail to include other important data that may explain pay disparities — such as seniority, experience or educational background, performance, production levels, or other job-related factors. In addition, the EEOC and OFCCP have not addressed significant data security, privacy and competition concerns relating to the compensation data that will be submitted.

The proposed rule is available on the Federal Register website. Interested parties will have 60 days to submit comments.

With increased attention being given at all levels to pay equity, employers are advised to consider a careful review of legal risks associated with their pay practices, processes for identifying pay disparities, documentation of job-related reasons for disparities, and steps for remedying unexplained disparities.