Uncle Sam Wants You! (to Provide Employee Compensation Data)

Foley & Lardner LLP

A new lawsuit filed by the U.S. Department of Labor (DOL) demonstrates how dogged the government can be in trying to obtain and review employers’ compensation data. The lawsuit, filed against Google with the DOL’s Office of Administrative Law Judges, alleges that Google failed to comply with its obligations to provide compensation data to the government as part of an Office of Federal Contract Compliance Programs (OFCCP) government contractor compliance audit.

The OFCCP is responsible for enforcing certain laws and Executive Orders that apply to government contractors, including Executive Order 11246, the Rehabilitation Act of 1973, and the Vietnam Era Veterans Readjustment Act of 1974. To carry out its mandate, including review of whether employers have widespread pay differences based on age or sex, the OFCCP selects employers for standard compliance reviews or audits. The audits typically begin with a scheduling letter that seeks, among other employment data, compensation information about employees by race and sex. In the Google case, the OFCCP requested information about employees’ compensation, including their wage histories, changes to compensation, and the employees’ names and contact information.

Google refused the OFCCP’s request, citing confidentiality concerns. This prompted the government to file the lawsuit seeking an injunction requiring the company either to comply with the government’s request or have all its federal contracts cancelled.

Although this case has not yet been decided, it is significant to all employers — not just federal contractors, because it shows that at least for now, the government is keenly focused on systematic pay equity issues. Federal contractors should be aware of their affirmative action obligations to keep and retain compensation data for their employees and review that data annually to ensure that there are no indicators of race or sex discrimination. But, even companies that are not federal contractors should pay close attention. Beginning in March 2018, all employers with 100 or more employees will have to file the revised EEO-1 Form, which requires disclosure of pay data, categorized by gender, race, and ethnicity. Because the EEOC revised the form and enhanced its reporting requirements, it is requiring filers to skip reporting in September of 2017, and instead file their next EEO-1 report on or before March 31, 2018 (covering calendar year 2017).

Given the OFCCP and the EEOC’s actions to enhance compensation reporting requirements, in an effort to unearth evidence of discrimination, all employers (not just government contractors) should conduct privileged reviews of their employees’ compensation data. This will allow employers to analyze that data to see how it may be used by the EEOC or the OFCCP to establish pay discrimination claims. Employers can feel more confident that there are no gender, race, or ethnicity-based disparities in compensation, and if necessary, make pay adjustments where discrepancies exist but cannot be explained by legitimate factors.

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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