Is Your Small Business Complying With New Pay Equity Laws?

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By Christopher Coble, Esq. on October 08, 2019 2:46 PM

It's 2019. So by now you should be aware that you cannot discriminate based on race or gender when it comes to employee compensation. The gender pay gap in particular has been a hot-button topic lately, with everyone from Vice to Oracle to Disney facing (and settling) lawsuits based on unequal pay for male and female employees. (It should also be noted that, especially with more nonbinary employees in the workforce, the best practice is to pay everyone with similar experience and doing similar work the same.)

So how do you, or the government, know that you're complying with pay equity laws? One method is annual EEO-1 filings, mandatory for certain companies and small businesses. Here's what you need to know.

Who

Does every small business need to submit an EEO-1 report? Perhaps luckily for you, no. Only companies that meet one of the following criteria are required to report:

  • You have 100 or more employees
  • You have less than 100 employees but you are owned, affiliated with or controlled by a company with more than 100 employees overall
  • You have 50 or more employees AND you have a federal contract/subcontract worth more than $50,000

What

And what, exactly, needs to be reported? The data is used to prevent pay discrimination, and asks for information on employees' race, gender, job category, and compensation. Most of that, aside from race, should be easily ascertained by employers. As for race, the Equal Employment Opportunity Commission advises against winging it:

Self-identification is the preferred method of identifying the race and ethnic information necessary for the EEO-1 report. Employers are required to offer employees the opportunity to use self-identification to complete the EEO-1 report. If an employee declines to self-identify, employment records or observer observation may be used.

Why

So, is the government planning to publicly shame you regarding your pay practices? Will they hand the info over to plaintiffs' attorneys? Not quite. The EEOC is prohibited from publicly releasing EEO-1 employment data. However, that data can be used by the Department of Labor to enforce civil rights claims.

How

You can find instructions on filling out and filing EEO-1 reports on the EEOC website. If you're wondering how to comply with pay equity laws in general, you may want to avoid asking about current or prior wages or salary histories when hiring. Women and minorities are often discriminated against in pay from the beginning of their employment, and using this information as the basis of your salary offer may continue pay inequities from candidates' prior employers into your organization or make it worse.

You can also be proactive in conducting quarterly pay analyses or audits, looking for evidence of pay gaps, especially prior to regular pay increases or promotion reviews. Pleading ignorance is not an excuse that will be accepted by government entities or employees.

When

The deadline for EEO-1 filings is September 30. So if you didn't file and are worried you need to, or have questions about your filing, contact an experienced employment attorney today.

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