Today, the White House announced that they have cancelled Obama-era plans to require businesses to report employee pay data based on gender and race.

What this means for employers

Employers will no longer be required to submit pay data as a part of the EEO-1 report, aka the “Component 2” piece, which required companies with over 100 employees to submit W-2 pay data and hours worked information.

The original component to the EEO-1 report, providing information about race, gender and ethnicity of employees, will still be a required report for companies over 100 employees.

What remains the same

The underlying laws regarding pay equality have not changed as a result of this decision. It is still illegal to pay employees differently based on their gender, race or ethnicity:

“The EPA provides that employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment.”

Companies still have a burden to ensure that they are in compliance with these laws, and will need to build and maintain policies and processes to assist in that compliance.

While the political winds may be swaying away from more EEO-1 Component 2 reporting at the moment, they may sway back again.  The further out of compliance a company gets, the harder it will be get back into compliance and more at risk companies put themselves in the meantime.  Reporting isn’t just for the government’s sake, it is also to make sure companies catch potential issues themselves.  So while the physical act of submitting this report is currently reduced, the onus is still on companies to keep similar records/data.

Our viewpoints and philosophy

In many ways, this report was conceived as a method to help companies uncover areas where pay inequity exists within their organization. Having visibility into compensation data empowers companies with the knowledge they need to improve their pay policies and best practices. It is a far better scenario for an HR organization to understand and get ahead of pay inequity than for individual employees to uncover this information through conversations or interactions with coworkers.

Even with less responsibility to report this information, we still believe it is absolutely critical for companies to measure and monitor how they compensate their employees. We understand how difficult it can be within a rapidly growing company to make consistent decisions about employee compensation, but we also know that pay equity matters deeply to those individuals whose livelihoods depend upon it. Therefore, having tools and metrics at hand is the best way to tackle the issue, using a data-driven and methodical approach.

We’re developing a cost-effective and straightforward method to help companies succeed in their pursuit of pay equity, not just because it is the right thing to do, but also because it is the law. We’re also focused on making our standards open and visible, and celebrating the achievements of our customers, because accomplishing demonstrable pay equity is something companies should be proud of.