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Why Federal Pay Data Collection Is Critical to Equity
Article

Why Federal Pay Data Collection Is Critical to Equity

Kalpana Kotagal’s confirmation to the Equal Employment Opportunity Commission offers promise for the reinstatement of federal pay data collection, a critical pay equity tool discontinued in 2019.

In this article
Advocates demand fair wages on International Women’s Day.
Advocates push for fair wages on International Women’s Day in New York City on March 8, 2021. (Getty/AFPAngela Weiss)

On July 13, 2023, the Senate confirmed Kalpana Kotagal as a commissioner to the Equal Employment Opportunity Commission (EEOC), reinvigorating EEOC priorities.1 One of these priorities is a pay data collection program operated through the Employer Information Report (EEO-1), which the EEOC voted in 2019 to discontinue for future use. The Trump administration approved the vote the same year.2

Pay data collection is a critical tool for achieving pay equity. It provides enforcement agencies—including the EEOC, the Office of Federal Contract Compliance Programs (OFCCP), and state labor departments—with better data to enforce civil rights laws and encourages employers to self-analyze their pay practices and address pay disparities.3 Specifically, collecting pay data through the EEO-1 would enable the EEOC and the OFCCP to better focus their limited resources on combating pay discrimination. With these data, the EEOC and the OFCCP could more successfully identify patterns of pay discrimination and occupational segregation within particular firms, industries, and localities.

This issue brief details important aspects of pay data collection through the EEO-1 and offers recommendations to improve such collection were it to be restarted.

Background on pay data collection through EEO-1

The EEO-1 form collects data from “all private sector employers with 100 or more employees, and federal contractors with 50 or more employees meeting certain criteria.”4 The EEOC first introduced pay data collection through the EEO-1 form in 2016, following an extensive six-year review process and public comment period during which the agency determined that pay data collection was essential to better enforcement of pay discrimination laws.5 Known as Component 2, the Obama-era pay data collection rule required certain private employers and federal contractors to report compensation information to the EEOC annually, with information broken down by race, sex, and ethnicity in 12 pay bands for the 10 EEO-1 job categories. This move complemented the EEOC’s long-standing collection of workforce demographic information through Component 1, which also required reporting from certain private employers and federal contractors.6

Yet despite Component 2’s utility for better enforcement of civil rights laws and its minimal burden on employers already familiar with the EEO-1 form, it has a complicated history, including a stay from the Trump administration Office of Management and Budget (OMB) in 2017.7 A federal judge ultimately reversed this stay in 2019. As mentioned above, however, that same year, the EEOC voted to discontinue future pay data collection through the EEO-1—a vote that received White House approval.

The recent history of EEO-1 reporting

In August 2017, the Trump administration’s OMB stayed the collection of pay data through the EEO-1 before the first collection was supposed to begin, in March 2018, and without notice or explanation.8 The National Women’s Law Center, Democracy Forward, and the Labor Council for Latin American Advancement sued the administration to reinstate data collection through the EEO-1, arguing that the OMB’s stay was unlawful for several reasons.9 The organizations posited, for example, that the OMB exceeded its legal authority and acted arbitrarily and capriciously by not providing a reasoned basis for the stay. The OMB’s stay memorandum was a little over one page long; this stood in stark contrast to the multiyear interagency process, involving public notice and comment periods, that was used to implement pay data collection through the EEO-1 in 2016.

In early 2019, a federal judge found the stay to be unlawful and ordered the EEOC to collect pay data for 2017 and 2018.10 The agency completed this collection in early 2020. However, in September 2019, the EEOC voted to discontinue future pay data collection efforts through the EEO-1 with approval from the Trump White House, arguing that the pay data was of “unproven utility.”11 The Trump administration’s assault on pay data collection continued when the OFCCP announced in November 2019 that it would no longer use EEO-1 pay data to enforce nondiscrimination requirements for federal contractors; the Biden administration OFCCP reversed this decision in September 2021.12

Pay data collection through the EEO-1 is a critical tool for pay equity

In 2021, women working full time, year-round earned just 84 cents for every dollar made by their male counterparts, and all women working earned just 77 cents for every dollar made by men. The disparities were even greater for many women of color: When compared with their white, non-Hispanic male counterparts, Latinas working full time, year-round earned just 57 cents for each dollar, while all Latinas working earned just 54 cents. Black women working full time, year-round earned 67 cents for each dollar, and all Black women working earned just 64 cents.13

A constellation of factors is responsible for the gender wage gap: Women, particularly women of color, are overrepresented in low-paid work and underrepresented in high-paid work, a feature of the labor market known as occupational segregation.14 In addition, women experience outright pay discrimination at the intersection of multiple identities and shoulder disproportionate unpaid caregiving responsibilities.15

In July 2022, the National Academies of Science, Engineering, and Medicine, whose independent analyses “inform policy with evidence,” released an extensive report confirming the importance of federal pay data collection in combating pay discrimination.16 The report, commissioned by a unanimous EEOC vote in 2020, analyzed the first and only pay data collected through the EEO-1 form for reporting years 2017 and 2018.17 The National Academies found that for each collection year, 90 percent of employers responded, totaling approximately 70,000 employers and more than 100 million workers per year. The researchers found substantial pay gaps within Silicon Valley firms and offered recommendations for future pay data collection efforts, including collecting pay data at the same time as Component 1 data, collecting individual-level wage data, and instituting additional and narrower pay bands.18

Pay data requirements used successfully in states and other countries

Over the past decade, many Organization for Economic Cooperation and Development (OECD) countries have implemented pay transparency measures.19 They vary in their provisions, including whether pay data are available to the public or just to enforcement agencies, which sizes of employers are covered, and what compliance looks like.

For example, the public-facing requirements included in the United Kingdom’s pay transparency measures make them some of the world’s most expansive.20 Starting in 2017, employers with 250 or more employees were required to annually report the mean and median pay and bonuses for employees and then publish the data on both their own and a U.K. government website. In the first two years of reporting, there was full compliance, and studies have found that the measures have resulted in the narrowing of gender wage gaps, primarily through lower male wages.21

Denmark’s law, passed in 2019, requires private employers with 35 or more employees to publish either “annual gender-disaggregated pay statistics” or gender pay reports every three years. Similar to the U.K. findings, one study found that the Danish law reduced the gender wage gap, primarily through lower male wages, by approximately two percentage points.22

And just this past year, both Ireland and Japan announced pay transparency measures. In Ireland, all public and private employers with 250 or more employees were required to submit reports to the government on the percentage differences between the hourly pay and bonuses of male and female employees by December 2022, as well as the percentage of male and female employees who received bonuses and benefits; this information will soon be available to both the public and the government.23 In Japan, starting in 2023, companies with more than 301 employees will be required to disclose gender wage gaps annually on their websites and in their annual securities reports.24

Pay data collection laws in Illinois and California

Some states have enacted their own pay data collection measures as part of a growing movement of state pay transparency laws.25 In 2021, Illinois enacted a pay data law that requires employers who file EEO-1 reports to certify compliance with federal and state equal pay laws by submitting their EEO-1 forms and a list of employees to the Illinois Department of Labor.26 Under this law, employers must submit employees’ compensation broken down by gender, race, and ethnicity and certify that there are not consistent compensation and benefits disparities by sex, race, or ethnicity. Employers must recertify every two years and are subject to a $10,000 fine if they do not do so.

In September 2022, California Gov. Gavin Newsom (D) signed S.B. 1162 into law, which expands on California’s existing pay data collection law.27 This latter law was enacted in 2020 in response to the Trump administration’s assault on pay data collection. S.B. 1162 requires employers with 100 or more employees, at least one of whom resides in California, to submit a pay data report including the number of employees by race, ethnicity, and sex in specified job categories to the California Civil Rights Department, as well as the median and mean hourly rate for each combination of race, ethnicity, and sex within each job category. The law also requires employers to submit a separate pay data report for employees hired through labor contractors.

Results from California’s 2020 pay data collection reveal that women are underrepresented in high-wage work and overrepresented in low-wage work. Of those earning $128,960 and over, only 36 percent were women; of those earning $30,679 and under, meanwhile, 55 percent were women.28

Recommendations to improve EEO-1 reporting

With Kalpana Kotagal confirmed as a commissioner, the EEOC should take quick action to reinstate pay data collection through the EEO-1. The following recommendations would help the EEOC improve EEO-1 reporting to most effectively combat pay discrimination:

  1. Incorporate the National Academies’ recommendations. The EEOC should incorporate the National Academies’ recommendations for future pay data collection efforts, including collecting pay data at the same time as Component 1 data, collecting individual-level wage data, and instituting additional and narrower pay bands.
  2. Develop new strategies for implementing pay data collection through the EEO-1. These strategies can include convening the expertise of employers, statisticians, and human resources information systems professionals; providing technical assistance to employers; and hosting webinars.
  3. Consider collecting pay data from more sizes of employers and federal contractors. For the 2017 and 2018 pay data collection, the EEOC collected pay data from employers and certain federal contractors with 100 or more employees. The EEOC should consider collecting pay data from federal contractors with 50 or more employees, as they are also required to file an EEO-1.29 The EEOC should also explore collecting pay data from employers with even fewer employees.
  4. Collect pay data on LGBTQI+ people. The EEOC is charged with enforcing Title VII of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color, religion, national origin, or sex.30 It has already collected compensation data by sex, race, and ethnicity, and in Bostock v. Clayton County, the U.S. Supreme Court held that Title VII’s prohibition on sex discrimination in employment includes discrimination on the basis of sexual orientation and gender identity. Other agencies have also interpreted the Bostock ruling as applying to discrimination against people with intersex traits.31 To effectively enforce the Bostock decision, therefore, the EEOC should prioritize collecting pay data that can be used to identify disparities by both sex and gender identity, while ensuring that strong data privacy and confidentiality standards for employees are in place. Doing so is key to furthering the Biden administration’s recent Federal Evidence Agenda on LGBTQI+ Equity, which underscores the importance of collecting these data for the purpose of civil rights enforcement.32 The EEOC has already signaled its commitment to addressing LGBTQ+ discrimination in light of Bostock: In June 2021, it released a technical assistance document, unfortunately vacated by a federal court in October 2022, and guidance on workplace equality for LGBTQI+ employees.33 In June 2022, the administration added a nonbinary gender marker to intake forms for discrimination charges.34
  5. Consider collecting pay data on other protected classes. The EEOC is charged with enforcing Title I of the Americans with Disabilities Act of 1990, which makes it illegal for employers to discriminate against a qualified employee or applicant with a disability, and the Age Discrimination in Employment Act of 1967, which protects employees and applicants 40 and older from age-related discrimination. The EEOC should therefore consider collecting pay data from employers on both disability and age.35

Conclusion

Pay data collection through the EEO-1 is a critical tool for ensuring pay equity because it enables the EEOC and the OFCCP to better enforce federal civil rights laws. The EEOC should prioritize a vote to reinstate this work. Pay data collection must also be accompanied by increased funding for the EEOC and the OFCCP. Stronger enforcement of pay discrimination laws will help narrow the persistent gender wage gap that continues to harm women and families’ economic security across the United States.

The authors would like to thank Rose Khattar, Caroline Medina, Karla Walter, Aurelia Glass, Becca Damante, and Maggie Jo Buchanan for their review and Amina Khalique for her fact-checking.

Endnotes

  1. National Women’s Law Center, “Kalpana Kotagal’s Long-Awaited Confirmation Today as EEOC Commissioner Is Good News for Workers,” Press release, July 13, 2023, available at https://nwlc.org/press-release/kalpana-kotagals-long-awaited-confirmation-today-as-eeoc-commissioner-is-good-news-for-workers/.
  2. U.S. Equal Employment Opportunity Commission, “What You Should Know: The National Academies’ Evaluation of Compensation Data Collected Through the EEO-1 Form,” available at https://www.eeoc.gov/wysk/what-you-should-know-national-academies-evaluation-compensation-data-collected-through-eeo-1 (last accessed March 2023).
  3. Jocelyn Frye, “Why Pay Data Matter in the Fight for Equal Pay” (Washington: Center for American Progress, 2020), available at https://www.americanprogress.org/article/pay-data-matter-fight-equal-pay/.
  4. U.S. Equal Employment Opportunity Commission, “EEO Data Collections,” available at https://www.eeoc.gov/data/eeo-data-collections (last accessed April 2023).
  5. U.S. Equal Employment Opportunity Commission, “EEOC to Collect Summary Pay Data,” Press release, September 29, 2016, available at https://www.eeoc.gov/newsroom/eeoc-collect-summary-pay-data; National Women’s Law Center v. Office of Management and Budget, U.S. District Court for the District of Columbia, No. 1:17-cv-02458-TSC (October 31, 2018), available at https://democracyforward.org/wp-content/uploads/2017/11/22-1-Memo-in-Support-of-MSJ.pdf.
  6. Ibid.
  7. Frye, “Why Pay Data Matter in the Fight for Equal Pay”; Democracy Forward, “Labor Council for Latin American Advancement, NWLC v. OMB,” available at https://democracyforward.org/work/nwlc-labor-council-for-latin-american-advancement-v-omb-eeo-pay-data/ (last accessed March 2023).
  8. National Women’s Law Center, “Resource Collection: EEO-1 Pay Data Collection,” January 30, 2020, available at https://nwlc.org/resource/resource-collection-eeo-1-pay-data-collection/.
  9. National Women’s Law Center, “We Just Sued the Trump Administration for Rolling Back Progress on Equal Pay,” November 17, 2017, available at https://nwlc.org/we-just-sued-the-trump-administration-for-rolling-back-progress-on-equal-pay/.
  10. Ibid.
  11. U.S. Equal Employment Opportunity Commission, “What You Should Know: The National Academies’ Evaluation of Compensation Data Collected Through the EEO-1 Form”; National Women’s Law Center, “Re: Notice of Information Collection – Request For New Control Number For a Currently Approved Collection: Employer Information Report (EEO-1) Component 1; Revision of Existing Approval for EEO-1 Component 2, EEOC-2019-0003-0001,” November 12, 2019, available at https://nwlc.org/wp-content/uploads/2019/11/NWLC-EEO1-2019-notice-comment-final-11.19.pdf.
  12. Ibid.; Office of Federal Contract Compliance Programs, “Rescission of Notice of Intention Not To Request, Accept or Use Employer Information Report (EEO-1) Component 2 Data, November 25, 2019,” Federal Register 86 (168) (2021): 49354–49355, available at https://www.federalregister.gov/documents/2021/09/02/2021-18924/rescission-of-notice-of-intention-not-to-request-accept-or-use-employer-information-report-eeo-1.
  13. Lauren Hoffman and others, “Recent Legislative and Executive Acts Represent Promise for Women’s Economic Security” (Washington: Center for American Progress, 2022), available at https://www.americanprogress.org/article/recent-legislative-and-executive-acts-represent-promise-for-womens-economic-security/.
  14. Marina Zhavoronkova, Rose Khattar, and Mathew Brady, “Occupational Segregation in America” (Washington: Center for American Progress, 2022), available at https://www.americanprogress.org/article/occupational-segregation-in-america/.
  15. Robin Bleiweis, “Quick Facts About the Gender Wage Gap” (Washington: Center for American Progress, 2020), available at https://www.americanprogress.org/article/quick-facts-gender-wage-gap/.
  16. National Academies of Sciences, Engineering, and Medicine, “Evaluation of Compensation Data Collected Through the EEO-1 Form” (Washington: National Academies Press, 2022), available at https://doi.org/10.17226/26581.
  17. U.S. Equal Employment Opportunity Commission, “EEOC Announces Independent Study Confirming Pay Data Collection is a Key Tool to Fight Discrimination,” Press release, July 28, 2022, available at https://www.eeoc.gov/newsroom/eeoc-announces-independent-study-confirming-pay-data-collection-key-tool-fight.
  18. Ibid.
  19. Organization for Economic Coordination and Development, “Pay Transparency Tools to Close the Gender Wage Gap” (Paris: 2021), available at https://www.oecd.org/publications/pay-transparency-tools-to-close-the-gender-wage-gap-eba5b91d-en.htm; International Labour Organization, “Pay transparency legislation: Implications for employers and workers’ organizations” (Geneva: 2022), available at https://www.ilo.org/wcmsp5/groups/public/—ed_protect/—protrav/—travail/documents/publication/wcms_849209.pdf.
  20. Organization for Economic Coordination and Development, “Pay Transparency Tools to Close the Gender Wage Gap.”
  21. Ibid.
  22. Morten Bennedsen and more, “Do Firms Respond to Gender Pay Gap Transparency?”, The Journal of Finance 77 (4) (2022): 2051–2091, available at https://doi.org/10.1111/jofi.13136.
  23. Leah Shepherd, “Ireland Requires Employers to Report Pay Disparities by Gender,” SHRM, May 9, 2022, available at https://www.shrm.org/resourcesandtools/hr-topics/global-hr/pages/ireland-pay-disparities-by-gender.aspx.
  24. Yoshie Midorikawa, “New Rules Require Japanese Companies to Disclose Their Gender Wage Gap,” SHRM, August 4, 2022, available at https://www.shrm.org/resourcesandtools/hr-topics/global-hr/pages/japan-gender-wage-gap.aspx.
  25. National Women’s Law Center, “Progress in the States for Equal Pay” (Washington: 2023), available at https://nwlc.org/wp-content/uploads/2023/01/Equal-Pay-Progress-in-the-States-1.12.23.pdf.
  26. An Act Concerning Employment, S.B. 1480, 101st General Assembly Illinois (March 23, 2021), available at https://www.ilga.gov/legislation/publicacts/101/PDF/101-0656.pdf.
  27. Employment: Salaries and Wages Act, S.B. 1162, California Legislature, 2021-2022 reg. sess. (September 27, 2022), available at https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220SB1162; Donna M. Mezias and Alexandra M. Guerra, “California Passes SB 1162, Expanding Pay Data Reporting and Pay Transparency,” Akin, October 26, 2022, available at https://www.akingump.com/en/news-insights/california-passes-sb-1162-expanding-pay-data-reporting-and-pay-transparency.html.
  28. Civil Rights Department State of California, “Pay and Demographics of California Workers: Results from Pay Data Reports from Large Employers,” available at https://calcivilrights.ca.gov/paydatareporting/results/ (last accessed March 2023).
  29. U.S. Equal Employment Opportunity Commission, “Legal Requirements,” available at https://www.eeoc.gov/employers/small-business/legal-requirements (last accessed March 2023).
  30. U.S. Equal Employment Opportunity Commission, “Laws Enforced by EEOC,” available at https://www.eeoc.gov/statutes/laws-enforced-eeoc (last accessed March 2023).
  31. U.S. Department of Justice, “Title IX,” available at https://www.justice.gov/crt/title-ix (last accessed March 2023).
  32. White House, “Fact Sheet: Biden-⁠Harris Administration Releases First-Ever Federal Evidence Agenda on LGBTQI+ Equity,” Press release, January 24, 2023, available at https://www.whitehouse.gov/ostp/news-updates/2023/01/24/fact-sheet-biden-harris-administration-releases-first-ever-federal-evidence-agenda-on-lgbtqi-equity/.
  33. U.S. Equal Employment Opportunity Commission, “Protections Against Employment Discrimination Based on Sexual Orientation or Gender Identity,” available at https://www.eeoc.gov/laws/guidance/protections-against-employment-discrimination-based-sexual-orientation-or-gender (last accessed March 2023); U.S Equal Employment Opportunity Commission, “Moving Towards Equality in the Workplace for LGBTQI+ Employees,” available at https://www.eeoc.gov/moving-towards-equality-workplace-lgbtqi-employees# (last accessed March 2023).
  34. U.S. Equal Employment Opportunity Commission, “EEOC Adds X Gender Marker to Voluntary Questions During Charge Intake Process,” Press release, June 27, 2022, available at https://www.eeoc.gov/newsroom/eeoc-adds-x-gender-marker-voluntary-questions-during-charge-intake-process.
  35. U.S. Equal Employment Opportunity Commission, “Laws Enforced by EEOC.”

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Authors

Isabela Salas-Betsch

Research Associate, Women’s Initiative

Lauren Hoffman

Former Associate Director, Women’s Economic Security

Team

Women’s Initiative

The Women’s Initiative develops robust, progressive policies and solutions to ensure all women can participate in the economy and live healthy, productive lives.

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