The Department of Labor (“DOL”) has followed through on a directive given by President Obama earlier this year regarding the collection of compensation data by federal contractors and subcontractors. On April 8, 2014, President Obama issued a memorandum entitled Advancing Pay Equality Through Compensation Data Collection, which directed the DOL to propose, within 120 days of the date of the memorandum, a rule that would require federal contractors and subcontractors to submit to the DOL summary data on the compensation paid to their employees. Consistent with the Presidential memorandum, the DOL announced the proposed rule on August 6, 2014, and it was published officially in the Federal Register on August 8, 2014.
The proposed rule applies to federal contractors that are required to file EEO-1 reports, have more than 100 employees, and have a contract, subcontract, or purchase order amounting to $50,000 or more that covers a period of at least 30 days. Under the proposed rule, applicable contractors will be required to submit an annual “Equal Pay Report,” which will be in a format similar to EEO-1 reports but will contain summary information on compensation paid to employees, as contained in their W-2 forms, as well as hours worked and number of employees. The Equal Pay Report will present the summary compensation data by sex, as well as the same seven race/ethnicity categories used in EEO-1 reports. The Equal Pay Report will also use the same 10 job categories used in EEO-1 reports. A sample of the proposed Equal Pay Report form can be found here.
It is proposed that the Equal Pay Report will be submitted annually during a report filing window of January 1 to March 31 of the following year, in order to obtain W-2 compensation data for the full year. Unlike EEO-1 reports, which use a “snapshot” approach requiring employers to only include those employees from one pay period between the months of July and September of the current survey year, the proposed Equal Pay Report covers a full calendar year from January 1 through December 31.
The DOL also proposes to aggregate each contractor’s summary data with those of peer employers by industry to construct “objective” industry standards. The DOL proposes to compare each contractor’s summary statistics to the relevant objective industry standard and will be more likely to prioritize contractors for compliance evaluation with pay gaps that are greater than the standard. Furthermore, the aggregated compensation data will be made available to the public on an annual basis, although the DOL states that it will maintain the confidentiality of individual contractor summary data to the extent it is able.
The proposed rule will be open for comment until November 6, 2014, and will not become effective until 180 days after the final rule is issued.