The New EEO-1 Form and Why Companies Should Look at Male–Female Pay Discrepancies Now
While some may dispute the claim that “women make 77 cents for every dollar a man earns,” on grounds that this statistic does not take into account differences in occupations, job tenure, or hours worked, few would deny that there is at least some gender pay gap that could be mined by Plaintiffs in discrimination cases. Large and sophisticated companies find that they may not be able to explain away all of these discrepancies. Dow Jones and The Wall Street Journal recently pledged to correct such discrepancies in the face of complaints from its union. And now, the EEOC is about to use a new tool that will make it easier to prove pay discrimination.
For more than fifty years, employers with more than a hundred employees have been required to file an annual EEO-1 report with the EEOC, showing the breakdown of their employees by sex and race/ethnicity in ten EEO-1 job categories. Absent an individual charge of discrimination, the EEO-1 reports have been primarily used by the government for research reports to create summary data for all reporting employers in a geographic area or the nation as a whole. Except for federal contractors, most employers and their employment lawyers have not worried much about an EEO-1 report, other than making sure that it got filed before September 1 each year.
That may be about to change. In order to combat pay discrimination, the EEOC has proposed using a new EEO-1 form that will require employers to provide salary information by sex and race/ethnicity by counting the number of employees in each of twelve salary ranges in each of the EEO-1 categories. For example, an employer who previously might have looked progressive because two of its ten executives were women, might now draw the attention of the EEOC if those two female executives earned salaries in the “$101,920-128,959” band while its eight male executives fell into the “$163,800-$207,999” or “$208,000 and above” ranges.
Employers should determine if they can explain such discrepancies by distinguishing job classifications within each job category (the senior electrical engineer should earn more than the junior accountant) or job qualifications within job classifications (the systems analyst with a master’s degree and ten years’ experience should make more than the newbie with a bachelor’s degree). Defending against pay discrimination claims can often be an expensive proposition involving experienced legal counsel and statistical experts. Moreover — as many federal contractors have already learned — the government often relies on blunt and questionable statistical methodologies when multiple regression analysis is called for, in order to estimate the effect of such variables as education, experience, hours worked, and performance. If explanations of pay differences are not available, employers should recognize that some of the women in their workplace have been paid less than similarly qualified men for doing substantially the same work and address those differences before being required to report it to the government.
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.