In an effort to close the pay gap based on gender, race and ethnicity, the Equal Employment Opportunity Commission is collecting data from certain US companies. According to regulations first proposed under the Obama administration, companies will have to file salary data for 2017 and 2018 by Sept. 30.
In theory, the data could help paint a better picture of what’s going on inside US companies. The new regulations come at a time when the tech industry is being scrutinized for a lack of diversity. In the past several years, diversity advocates have called for companies to not just reevaluate their hiring processes, but also to examine how they pay and promote.
“Although much progress has been made in the past 50 years, pay disparities continue to be a problem in the American workplace” the EEOC said in a post, explaining that the data will “encompass more than 63 million workers and will strengthen enforcement efforts of pay equality laws and help employers evaluate their own practices.”
Companies with 100 employees or more already submit the EEO-1 form, detailing demographic information. Now they’ll turn in a second component to that form.
One of the key issues is the disparity in how different demographic groups are compensated. In 2018, the Pew Research Center found that women in the US earned 85% of what men earned. In earlier research from 2016, Pew found that white men out-earned all groups of women (including women of color), as well as black and Hispanic men. Within the tech industry, Glassdoor found a 5.4% pay gap (adjusted for factors like experience and education) between men and women, which is above the national average of 4.9 percent, according to a March report.
In 2015, after Salesforce employees went to CEO Marc Benioff with concerns over a gender pay gap, the company spent $3 million to correct the imbalance. Salesforce did it again in 2017, spending an additional $3 million after a series of acquisitions and growth at the company.
“Our commitment to achieving gender pay equity is central to making Intel a truly inclusive workplace, which we believe is a key factor in employee performance, productivity and engagement,” Julie Ann Overcash, vice president of human resources and director of compensation and benefits, said in a post at the time.
“You measure what matters, and data transparency is absolutely critical to where companies need to put more effort in establishing equity,” said Stephanie Rodriguez, VP of policy and engagement for AnitaB.org, an organization that works for the advancement of women in technology.
The new EEOC rule hasn’t been without controversy. In 2017, the Trump administration froze it before it would’ve gone into effect in 2018.
According to The Washington Post, the Office of Management and Budget expressed concern the regulations were “unnecessarily burdensome.”
The US Chamber of Commerce also took issue with the regulations in a 2017 letter to the OMB questioning the burden, benefit and confidentiality of the new rules.
After a battle in the courts, including a lawsuit from the National Women’s Law Center, a federal district judge in Washington DC ruled in March that the Trump administration must reinstate the rule.
There’s also concern that the way in which the data is collected might not paint an accurate picture of what’s going on inside companies.
Brian Barger, partner at McGuireWoods, said there are certain factors the data collection doesn’t account for, partly because it asks for info from Box 1 of employees’ W-2s. In one of several examples Barger gave, two employees could be earning the same base salary, but one might be paying into a 401(k). The Box 1, W-2 data would show them as having two different salaries.
Barger said that though the data might be well intended, it’s frustrating because it won’t provide an accurate reflection of who companies are.
There’s also some question as to what the EEOC will do with the data. Under the Obama administration, the agency said it might create a report based on the data, looking at different industries. In the case of a discrimination filing, it could also pull relevant information from the company. Under the Trump administration, it’s not clear if that’s still the plan. A spokesperson for the EEOC noted that the agency posts public aggregated EEO-1 data on its website.
As of Sept. 5, only 13.4% of eligible filers had submitted info to the EEOC, and about 37,000 employers had yet to either submit, contact the help desk or even register for the online portal, according to a status update filed by the EEOC pertaining to the National Women’s Law Center case.
On Sept. 11, the fate of the EEO-1, component 2 data collection got even more uncertain. The EEOC said it will not renew its request for this data after the current authorization expires, saying the “unproven utility” of the pay data collection was “outweighed by the burden imposed on employers that must comply with the reporting obligation.”
So while employers still have to file by Sept. 30, they may not have to again in the future, frustrating diversity advocates.
“You can’t fix what you don’t know,” Rodriguez said.