Seeking to capitalize on President Obama's final year in office, the Equal Employment Opportunity Commission (the "EEOC") is proposing a new burden on employers and codifying its positions on discrimination and retaliation.
Show Me the Money: Adding Pay Data to the EEO-1
On January 29, 2016, the seventh anniversary of the Lilly
Ledbetter Fair Pay Act, President Obama announced that employers
with more than 100 employees will be required to add pay
information to their employer information reports, known as the
EEO-1. This proposed report will permit the EEOC to review racial,
ethnic, and gender distinctions in pay ranges and hours worked
within broad job categories. Not only will this change create an
additional administrative headache for employers, but this
noncontextual data necessarily presents potential liability
concerns.
The EEOC is proposing that employers disclose their employees'
W-2 pay by grouping it into twelve wage bands. Currently, employers
are required to complete the EEO-1 by September 30 each year using
data from a twelvemonth period beginning in a pay period between
July and September of the prior year, as selected by the employer.
Even though the EEOC wants to use W-2 pay data, it does not plan to
change the time frame of the collected data. Consequently,
employers cannot rely on year-end W-2 amounts to create these
reports, and instead will need to calculate annual W-2 data as of a
date in the middle of the year.
The EEOC reasons that this additional reporting will require only a
one-time programming update to an employer's human resources
information system ("HRIS"). The EEOC may well be
underestimating the ease with which such a change may be
implemented. Moreover, for those employers who do not have a robust
HRIS, this burden may be significant. As the assembly of this
information will be exceedingly arduous, covered employers should
strongly consider implementing an HRIS.
As for the use of W-2 gross pay, the EEOC reasoned that it provides
a view of an employee's entire compensation, whereas salary or
hourly pay rates would omit important supplemental compensation
such as overtime hours and bonuses. However, such broad data,
without context, offers little help in identifying discriminatory
pay practices. Reporting of W-2 data alone does not explain one-off
payments such as sign-on bonuses, relocation stipends, or
compensation paid to substitute for equity being forfeited when a
new employee leaves a former employer. It also does not capture
stock options when they are granted and instead may report them
when they are exercised years later.
Most important, the mere reporting of W-2 gross pay in EEO job
categories does not provide context concerning differing job
responsibilities, location, performance, experience, seniority, or
education. It can be difficult to compare the compensation data of
two employees in the same job, let alone all employees in a single
EEO job category. For example, employees with managerial
responsibilities are split into two categories: (1) First/Mid Level
Officials and Managers and (2)Executive/Senior Level Officials and
Managers. Because the Executive/Senior Level Official category of
managers is limited to those employees who direct strategy for the
business and are within two reporting lines of the CEO, large
employers who have several reporting levels are forced to lump most
of their managers into the First/Mid Level Officials category,
although responsibilities and compensation of these individuals may
vary greatly. Moreover, a first-level manager in a catering
department might be compared to a manager of a trading desk
responsible for generating revenues. Their compensation in all
likelihood will be dramatically different, and the way such
information is summarized and averaged on the EEO-1 may lead to an
erroneous perception of discrimination.
Additionally, despite its intentions, the EEOC will not be able to
determine discrepancies in the executive levels of the workforce in
companies with high compensation levels. Because the top proposed
wage band covers all employees who earn $208,000 or more, it may be
impossible to conduct any meaningful analysis of data covering
large swaths of highly compensated employees.
While the agency is required to keep all EEO-1 data confidential,
the agency announced that it will develop a software tool to look
at W-2 pay distribution within the individual employer and compare
it to the employer's industry or location. The EEOC will
continue to publish aggregated EEO-1 data as overviews of industry
and national trends, but such publication will not reveal
individual employer data. More important, litigants may submit
Freedom of Information Actrequests for an employer's EEO-1
report as long as the request is accompanied by a copy of a
complaint against the employer alleging violations of Title VII or
the Americans with Disabilities Act that is stamped
"filed."
The changes to the EEO-1 will be effective for reports due on
September 30, 2017. Employers should wait for the final form to be
issued, but begin planning to implement the HRIS and other changes
that will be necessary to compile the required information.
The EEOC Reminds Employers of Workplace Rights for Muslim and Middle Eastern Employees
In the wake of the latest terrorist attacks and pronouncements
of presidential candidates concerning Muslims in general, Americans
are regularly discussing policy proposals related to Muslims and
individuals of Middle Eastern descent. Consequently, the EEOC
released a question and answer guide addressing issues related to
employees and applicants who are, or are perceived to be, Muslim or
Middle Eastern. The Q&A provides employees with specific steps
for addressing potential harassment and discriminatory employment
practices – many of which require employers to be mindful of
their policies and practices.
Notably, the guide indicates the EEOC's interest in hiring
practices. The EEOC writes that if an applicant believes he or she
was not given a job because of his or her religion or national
origin, the applicant should file a charge with the EEOC in order
to "get[] enough facts to determine whether the action was
discriminatory." Because it appears that the EEOC intends to
be more focused on hiring practices, employers must be careful that
their employment decisions are free from discrimination.
The remainder of the Q&A largely focuses on harassment of
employees and directs employees to refer to their employer's
anti-harassment policies and procedures and notify their managers
of the alleged harassment. Indeed, the EEOC even recommends that
employees document incidents of harassment. It also suggests that
when management becomes aware that there is tension among employees
concerning these topics the employer should send out a company-wide
communication reminding all employees of anti-harassment policies
or conduct anti-harassment training.
Finally, via this guidance, employers are reminded that employees
must be offered reasonable accommodations to observe their
religious practices when such deviations from workplace policies do
not pose an undue burden.
In light of the EEOC's interest in this area, employers should
review their anti-harassment policies, complaint procedures, and
processes for considering reasonable accommodations to ensure they
are updated. Additionally, employers should be mindful of workplace
conversations that in the current climate could devolve into
perceived harassment.
New Enforcement Guidance Regarding Retaliation
For the first time in eighteen years, the EEOC is seeking to
update its enforcement guidance concerning retaliation, and it is
pulling no punches. Since its 1998 guidance, the EEOC has seen a
steady increase in retaliation charges. Accordingto the EEOC,
retaliation has been alleged in almost half of all charges it
received in 2014, and since 2008 it is the most frequently asserted
charge. The 76-page proposed guidance was published for public
comment in January 2016 and will likely replace the 1998 guidance
in the coming months.
While not binding on courts, this new guidance will be used by EEOC
investigators in assessing alleged violations of
anti-discrimination laws. Largely, the EEOC's guidance
summarizes Supreme Court rulings and cherry-picks its favorite
circuit and district court decisions. The proposed guidance
demonstrates the EEOC's broad interpretation of the three
elements of retaliation: (a) an individual engages in protected
activity, (b)adverse action is taken by the employer, and (c) a
causal connection between the protected activity and the adverse
action exists. We highlight below some of the expansive
interpretations.
The EEOC's guidance asserts that "protected activity"
consists of (a) participating in an EEO process or (b) opposing a
practice. The guidance provides the following clarifications, some
of which are unexpectedly expansive:
- An individual can succeed on a
retaliation claim as long as he or she has a reasonable belief that
he or she is engaging in protected activity, even if the individual
is wrong about the existence of underlying discrimination.
- The "opposition" clause of
Title VII is expansive and includes accompanying a co-worker in
filing an EEO complaint.
- The agency rejects the "manager
rule" created by some circuit courts, thereby protecting
managers and human resources personnel from retaliation, explaining
that efforts to protect against retaliation cannot be effective if
"those employees best situated to call attention to and oppose
an employer's discriminatory practices are outside its
protective ambit."
- A supervisor who does not carry out
management's unlawful instructions can passively engage in
protected activity.
- It might be reasonable for an
individual to inform union officials, co-workers, an attorney, or
even persons outside the company of their complaint and thereby
engage in protected activity.
- Inquiries or discussions concerning compensation may suffice as oppositional activity if such activity could reasonably be interpreted as a complaint in opposition to discrimination.
For an adverse action to be actionable, the employer's conduct must be materially adverse and meant to deter a reasonable person from engaging in protected activity. Similarly, the EEOC's explanation of adverse action may catch some employers off guard, especially in light of the fact that several circuit and district courts disagree in some respects:
- The standard can be met even if the
individual was not in fact deterred.
- Asingle incident may not be
considered materially adverse, but if the employer's conduct as
a whole would deter protected activityit will be considered
materially adverse.
- Actions outside the workplace may
constitute adverse actions, such as disparaging comments to third
parties.
- Abusive verbal or physical behavior
may be an adverse action, even if it would not meet the severe and
pervasive standard necessary to create a hostile work environment,
but "petty slights and trivial annoyances" are not
sufficient.
- Threats concerning an
individual's immigration status may be considered an adverse
action.
- A manager's request that co-workers monitor an employee's activities constitutes an adverse action.
The guidance also warns employers not to engage in retaliation
against third parties. For example, an employer is prohibited from
retaliating against a complaining employee's co-worker relative
or altering a vendor contract with the employee's family member
in retaliation for the complaining employee's protected
activity. Further, the EEOC takes the position that the complaining
employee's relative (employee of the company or not) who was
directly harmed by the retaliation has standing to pursue a
retaliation claim against the employer.
Finally, the guidelines suggest the following best practices:
- Maintain a written, easy-to-read
anti-retaliation policy that includes examples of retaliation that
may not be obvious, proactive steps for avoiding retaliation, a
reporting mechanism for employee's concerns related to
retaliation, and a clear explanation that retaliators can be
subject to discipline, including termination.
- Train all employees regarding the
anti-retaliation policy, send a message from management that
retaliation will not be tolerated, and hold periodic refresher
courses.
- Issue communications from senior
management that the company will not tolerate retaliation.
- Tailor training to issues that have
occurred in the workplace.
- Consider efforts to encourage
workplace civility.
- Proactively followup during the
pendency of an EEO matter.
- Review employment actions to ensure they are nonretaliatory.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.