Legal Blog

Why Companies Should Be Concerned About the EEOC and Its Ever-Growing Reach Into Your Business – Part 1

job interview

Earlier this year, the Equal Employment Opportunity Commission (EEOC) released a notice that put forth proposed changes to the yearly EEO-1 report. While the notice could hardly be considered front-page news, legal professionals attuned to labor and employment matters immediately took notice, calling to attention the ways in which the proposals would amend federal reporting requirements and possibly alter employers’ payment practices.


How would the typical business need to change? Where is the Commission focusing its efforts? And what should you know to ensure your organization’s ongoing EEOC compliance in 2016, 2017, and beyond?


Before we explore the answers to these questions, we would like to review a few basic facts about the EEOC and its role in governing the workplace:

What Is the EEOC and What Does It Enforce?

The EEOC enforces federal laws regarding discrimination against job applicants and employees. From hiring to termination, wage and benefits disputes to training and promotions, the EEOC oversees all manner of work-related situations and conflicts.


The classifications the EEOC protects are on the basis of race, color, religion, sex (including pregnancy), national origin, age, disability, and genetic information. Aside from observing protections on these characteristics, employers may not discriminate against a person if that person complained about discrimination or participated in a related investigation or lawsuit (otherwise known as “retaliation,” the most frequent basis for discrimination charges lodged with the agency). Any employer that has more than 15 employees is subject to EEOC enforcement, and those with more than 20 employees are subject to age discrimination enforcement.


The EEOC claims that its role is to “fairly and accurately assess” and make findings based on charges employees file against their employers. Investigators interview witnesses such as current and former employees, review personnel files, schedule fact-finding conferences, and perform other measures with the objective of obtaining information. Once the EEOC makes its decision, and if the Commission has found that discrimination has occurred, it will attempt to resolve the charge through mediation or conciliation. Otherwise, it may file a lawsuit to protect the rights of the purportedly aggrieved individual, regardless of whether that person chooses to file a lawsuit themselves.


In most cases, the EEOC does not file a lawsuit, even where it does find that discrimination has occurred. In an overwhelming number of EEOC charges we have handled at Offit Kurman, the agency tends to resist the charge after reviewing the position statement we submit on behalf of clients and find no violation. It then issues the charging party a Right-to-Sue letter, and the case frequently ends there if the employee refuses to file a lawsuit on his/her own.

What Is the EEO-1 Report?

The EEOC also monitors Affirmative Action programs and surveys cos based on their EEO-1 submissions. The EEO-1 Report is mandatory for all private employers with 100 or more employees, as well as all federal government contractors or first-tier subcontractors with 50 or more employees and a contract worth at least $50,000. The report requires employment data based on race, ethnicity, gender, and job categories. This information is not private; researchers, attorneys, human resources staff, and members of the EEOC can access EEO-1 Report data to enforce Title 7 of the Civil Rights Act.

How Would the Proposed Changes to the EEO-1 Report Affect Your Business?

In January 2016, the agency released a Notice of Proposed Changes to the EEO-1, in commemoration of the seventh anniversary of the Lilly Ledbetter Fair Pay Act of 2009. The Lilly Ledbetter Act was the first bill signed into federal law by President Obama, and it amended the Civil Rights Act. The Act states that with each new paycheck, the 100-day statute of limitations on an equal pay discrimination claim can restart.


The proposal adds a couple of data points to the EEO-1 Report—pay ranges and hours worked—to help the EEOC and The Office of Federal Contract Compliance Programs (OFCCP) discern pay disparities across occupations and industries. (Note that the data is based on W-2 employees and not 1099 contractors.) With the aggregate data, the EEOC intends to give employers the information they need to keep their pay practices fair and compliant. The EEOC decided to ground its national wage data in total W-2 earnings to minimize the burden on employers. The W-2 forms indicate gross income, a robust measurement that includes wages, overtime, salaries, commissions, bonuses, differences in shift duration, tuition reimbursement, profit-sharing, and so on.


Companies analyze their organization’s data now and determine ways to ensure equality, or at least have legitimate reasons for some differentials in pay—for instance, higher education, advanced degrees, more years of experience, and so on. What your data looks like on paper may surprise you, and it’s a good idea to analyze pay practices before the EEOC requires you to, so you can assess, evaluate, and realign practices internally.


The EEO-1’s new data is intended to aid the EEOC in assessing wage discrimination complaints and conducting investigations. We speculate that the Commission is setting its sights on larger companies and institutions in fields like the sciences, medicine, construction, automotive services, and technology, where women and minorities have traditionally been underrepresented.


The public comment period on these has changes ended and the law is expected to pass and take effect around September 2017—starting then, employers will most likely be subject to the new reporting requirements, and will also be required to submit their forms electronically. With that in mind, make sure to request a digital username and password from the EEOC if you haven’t already.


Next Steps

The proposed changes to the EEO-1 will, in all probability, become law very soon. Make sure to stay up to date with Offit Kurman’s articles or webinars on this topic.


These changes are not the only developments regarding the EEOC that you will need. In our next blog post, we will examine a few recent disputes to uncover how the EEOC continues to court debate through its growing reach into U.S. businesses. Later in this series, we will show you how you can better protect your company by creating and revising policies and procedures and minimizing liability so you have as little interaction with the EEOC as possible.


Any questions? Contact us


Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 120 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eight offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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