Do You Disclose Workforce Diversity Data? The OFCCP Might Do That For You
Any employer required to collect EEO-1 workforce demographic data should be thinking about the issue of whether to publicly disclose that data, and consider what might happen to it once it’s disclosed. This point is driven home by the OFCCP’s recent notice in the Federal Register that it may disclose EEO-1 Reports filed by certain federal contractors from 2016–2020 (namely, Type 2 Consolidated Reports) in response to a FOIA request by a nonprofit news organization. The OFCCP has given impacted federal government contractor or subcontractor employers until September 19, 2022 to object to the disclosure of this information.
But putting aside the OFCCP for a moment, due to the rise and proliferation of ESG disclosures, the question of whether to publicly disclose workforce demographic data is a hot issue for all employers – not just federal contractors.
Disclosure of workforce demographic data should not be a “given” for any employer, public, private, federal contractor, or otherwise. Whether and how best to present diversity data publicly is a thought-provoking conversation. There is no one-size-fits-all solution and it is folly to blindly follow an example set by a peer.
Here are some basic, important considerations for public and private companies alike in determining whether and how to disclose diversity data:
- In the U.S., you are not legally required to disclose all or any portion of your company’s EEO-1 data, except to the EEOC. That being said, there is certainly a lot of pressure to disclose it. Pension funds, asset managers and investors have taken steps in support of disclosure of EEO-1 data in documents such as 10-Ks or proxy statements.
- Don’t assume a public disclosure of EEO-1 data has to be in the same format as an EEO‑1 disclosure (e.g., race/ethnicity and gender percentages for employees). Disclosing diversity data can take many forms, and another metric may be more useful to your company, or may even be useful in addition. Some examples of other metrics include year‑over‑year percentage improvements in diversity goals; percent diversity among new hires; percent diversity among a recruiting pool for employees; or a specific measure of the effectiveness of any new DEI efforts.
- Past disclosures are relevant to future disclosures. Some questions to ask before any new disclosure: (a) What categories of information has the company publicly disclosed in the past? (b) In light of the company’s DEI goals, what story does the new year’s data tell? Is the company about to disclose data that shows a failure to meet DEI goals? (c) Are there other, non-quantitative disclosures that would help explain the data or tell the full story? (d) What would the consequences be if the company didn’t continue to disclose the data that it has disclosed in the past, or changed the format of its disclosure?
- Consider the company’s goals. If the company has never publicly disclosed diversity data, how will disclosing it help tell your company’s DEI story? Where will you disclose it (e.g., Sustainability Report, Proxy, 10-K, website, e-mail)? What metric will you use? Is there a specific DEI effort that your company has implemented over the last year and can you use data to illustrate its impact? Consider whether disclosing the steps the company has taken related to DEI – as opposed to statistics or raw numbers – is better than just disclosing numbers, since the company certainly has more control over its actions than those of the many individuals comprising its statistics.
- What is the company doing with DEI in its supplier program? Many companies today are considering – and disclosing – ways that diversity goals can be embedded into a supply chain, and taking the opportunity to use DEI to build ties with the communities in which they do business.
- Consider who will take note of any disclosure. Employees and directors, for starters. But also asset owners, shareholders (DEI data is a continued theme in proxy season), institutional investors, potential community stakeholders and regulators, to name but a few stakeholders. What have they asked for?
When done thoughtfully, DEI disclosures can have significant value to a company’s stakeholders, including by demonstrating commitment, credibility and progress in diversity to its employees. But without forethought, those same disclosures may detract from the company’s goals and DEI commitments and even create litigation risk. That’s what we want to avoid.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.