Pay Transparency: Court Order Directs OFCCP to Release EEO-1 Reports

A federal court in California has ordered the Office of Federal Contract Compliance Programs (OFCCP) to release the EEO-1 reports of federal contractors. The contractors had filed an objection to the release of their data in response to a Freedom of Information Act (FOIA) request.

The Court Order reflects a national and global trend toward greater pay transparency, as we highlight below. The OFCCP has until Feb. 20, 2024, to appeal the court’s decision. If no appeal is made, the remaining EEO-1 reports must be released in line with the FOIA request.

Background to OFCCP Court Order

Between 2019 and 2022, the Center for Investigative Reporting (CIR) submitted FOIA requests to the OFCCP. The CIR asked for all Type 2 Consolidated EEO-1 Reports filed by federal contractors and first-tier subcontractors 2016 through 2020.

FOIA provides the public with the right to request records from federal agencies, including the OFCCP, with certain exclusions. In response, the OFCCP notified contractors how to object to the release of EEO-1 reports. Subsequently, it released EEO-1 reports for contractors who had not raised objections. In November 2022, the CIR sought the release of the remaining EEO-1 reports.

Applicable employers are required by the Equal Employment Opportunity Commission (EEOC) to report on the racial/ethnic and gender composition of their workforce. EEO-1 data is provided by specific job categories. EEO-1 reports are mandatory and submitted on an annual basis.

In ruling in favor of the CIR, the court determined:

• EEO-1 reports are non-commercial, as they cover workforce data that doesn’t reveal specific operational or financial company data.??
• EEO-1 reports are not protected by the Trade Secrets Act: The court stated that EEO-1 reports do not qualify as trade secrets or confidential commercial information.
• No evidence of demonstrated harm from disclosure: The court found no substantial evidence of direct harm or that businesses treat EEO-1 reporting information as secret.

Wider Implications for Pay Transparency

While the Court Order relates to federal contractors, it reflects a broader trend toward pay transparency. That includes within the OFCCP itself, as federal contractors with 50 or more employees that have a contract valued at $50,000 or more are required to develop and maintain a written affirmative action program (AAP). Organizations must evaluate their compensation system to determine whether there are gender, race or ethnicity based disparities.

Further, the OFCCP prohibits contractors from, “….discharging or otherwise discriminating against applicants or employees who inquire about, discuss or disclose their compensation or that of others…”

Pay data reporting in the U.S.: Only California and Illinois require pay data reporting but Massachusetts is poised to join them. Speculation over the return of EEO1-Component 2 has also strengthened the past year. Further, one in four U.S. workers are now covered by pay transparency legislation, equating to 44.8 million workers. Data from the National Women’s Law Center suggests that figure could rise by an additional 38.8 million workers in the next couple years as more states consider enacting pay transparency legislation.

Equal pay is a priority for the EEOC: Advancing equal pay is named as a targeted priority in the EEOC’s Strategic Enforcement Plan (SEP).

Pay transparency In Canada: Both British Columbia and Ontario have introduced pay transparency legislation aimed at closing persistent gender pay gaps.

Expanding Pay Data Reporting and Employee Rights

A global disruptor in pay data reporting, the European Union’s Equal Pay and Transparency Directive introduces a range of measures to strengthen pay transparency and employee rights. For instance, criteria used to determine pay levels and progression must be easily accessible to employees. Employers must also respond to employee requests for information on individual and average pay levels. That must be categorized by gender for workers doing the same work, or work of equal value.

In pay discrimination claims, the burden of proof shifts from workers to employers, and compensation is uncapped. Employers must also report on their gender pay gap and act where it exceeds 5%.

Elsewhere, employee rights are expanding.

New York, for example, has stepped up its efforts to close the gender pay gap and strengthen employee rights. Effective Feb. 15, 2024, employees have up to three years to file discrimination and retaliation claims under the New York State Human Rights Law. That’s up from one year. State Assembly Bill A00501 applies to “to all unlawful discriminatory practice claims arising on or after such effective date.”

On September 6, 2023, New York updated existing legislation, making wage theft a form of grand larceny.?

Ensuring Compliance with Pay Transparency Legislation

Something has to give. Women are half a century away from equal pay, and that’s the current best-case scenario. Gender pay gaps for Black and Latina women are even greater. Act now to protect employee rights and ensure compliance with expanding legislation:

• Commit to pay transparency: Pay transparency lawsuits are soaring in Washington since its Equal Pay and Opportunities Act came into force in January 2023. The state allows for plaintiffs to recover “statutory damages equal to the actual damages or five thousand dollars, whichever is greater,” plus costs and reasonable attorneys’ fees. Complying with complex pay transparency laws is an obstacle facing many employers. Adopting a company-wide policy of pay transparency can help to avoid the predicament facing Washington state employers. The first step is a pay equity audit.
• Analyze pay inequities: Over 950 pay discrimination claims were filed with the EEOC in 2022, the first rise in three years. Carrying out a pay equity analysis identifies gender pay gaps and allows employers to take steps to eliminate inequities. Trusaic PayParity carries out pay equity audits at the intersection of factors including race/ethnicity, gender, age, disability, and more.
• Ensure timely EEO-1 report submission: Prepare EEO-1 filing to ensure visibility into potential issues around pay equity.? With accurate analysis and reporting, you can make proactive changes all year round to ensure equal employment opportunities across your workforce.

Navigate pay transparency laws with confidence. Speak to one of our pay equity experts.

Download: Pay Equity Definitive Guide

With new reporting requirements surfacing all the time, employers must stay updated to ensure they’re complying. Head over to our global pay data reporting page to learn about the latest laws and what steps you can take now to stay ahead of the regulations.