Global Employee DEI Data: What Can You Know and When Can You Know It?

Seyfarth Shaw LLP

The focus on environmental, social, and governance (ESG) issues and workforce diversity, equity, and inclusion (DEI) efforts is now more prominent than ever. With that has come an increased focus on collecting so-called “DEI data” such as race, ethnicity, gender identity, sexual orientation, disability, and preferred pronouns from employees around the globe.

While collection of these data points in the US is common, and in some cases even legally required, employers should be aware of potential pitfalls and consider how to take both a legal and meaningful approach to DEI data collection for their global workforce outside the US.

The Legal Considerations

As a starting point, employers must evaluate what employee data is legally permissible to collect. Restrictions on collection and transfer vary from country to country and will depend on applicable employment and data privacy laws.

In some countries, explicit employee consent will be required. For some categories of data, such as race and ethnicity, anonymous collection may be the only way to obtain the information. Additionally, data privacy laws require that data collection must be proportional to the legitimate purposes for collection and use. As such, permissibility of data collection may differ between applicants and employees.

In most cases, asking for voluntary disclosure rather than requiring it of employees will permit employers to gather a broader range of data. For example, in most countries, an employer can ask employees to voluntarily disclose their preferred pronouns and give them the option to decline, but mandating that employees provide the data could trigger privacy and consent issues. If the data is anonymized, there may be an even broader permissible range. Nevertheless, even anonymous and voluntary DEI data collection may require a works council consultation process in some countries.

Even where DEI data can legally be collected, doing so is not without risk. Employers must carefully weigh the benefits of data collection with the associated risks such as discrimination claims and privacy violations.

Positive DEI Impact: How to Collect in a Meaningful Way

Once the legal aspect is evaluated, perhaps an even more critical question for employers is how to collect DEI data effectively and in a meaningful way.

Understanding how data will be used can help inform how data is collected. Tailoring data requests is also important to obtaining meaningful data. For example, relevant self-identifiable categories regarding race and ethnicity will vary greatly from country to country. DEI end goals should be given thought and consideration so that data collection reflects employer objectives.

If the objective is to collect DEI data to better understand a company’s diversity metrics broadly, anonymous reporting might be a viable option. Meaningful results will depend on participation, which will vary culturally across jurisdictions. Ensuring anonymity in data collection and education about the goals behind the data collection is important.

Employers also should consider how employees will respond to DEI data collection requests and appropriately tailor the data points and related employee communications to the jurisdiction. For instance, asking employees to provide their preferred pronouns and gender identity is likely to be viewed differently by employees located in the Middle East than employees located in Western Europe. Even further, certain data points could criminally implicate employees, for instance, in countries where same-sex relationships are illegal. Employers should bear in mind cultural norms, employee reactions, and legal implications when considering which DEI data to collect and tailor requests accordingly.

Employers with global workforces considering DEI data collection should seek advice on the legal approach and risks, as well as critical strategies to achieve alignment with corporate ESG and DEI initiatives. A thorough evaluation of the legal, cultural, and organizational impacts can make a substantial impact on both risk mitigation and positive employee engagement.

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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