The Equal Employment Opportunity Commission (EEOC) just announced that, as of March 2018, some employers will be required to provide additional data on compensation, in an effort to help them identify pay discrimination and close the wage gap.
It sounds harmless enough – just another few lines in already laborious reporting requirements for companies. Yet this is more than just a little extra red tape (and it’s actually quite a bit of extra red tape, as IWF’s Charlotte Hays explains).
The EEOC may sincerely hope that employers will react to this new requirement by ending discriminatory pay practices, but most employers already aren’t discriminating against their employees based on sex or race, and the pay differentials that exist do so for a business reason. The threat of additional EEOC scrutiny, however, means they will have a new incentive to standardize their compensation practice to stamp out these legitimate differences in pay between employees.
It’s not just that employers may stop rewarding employees for greater productivity, longer work hours, additional duties, or years of experience. They also may also stop offering some workplace flexibility. Women–particularly working mothers who tend to place a high value on flexibility and are often willing to trade higher pay for a flexible schedule—sometimes intentionally negotiate a lower salary with the understanding that they would have the ability to work from home, won’t have to travel, or could adjust work schedules to match their children’s school calendar. They may know that their compensation package is a win-win for employer and worker, but the human resource manager and legal team will now have to worry about whether the EEOC will also be able to see that from the bare numbers on a form. The natural decision for businesses that want to avoid legal hassles will be to ax nontraditional work arrangements in favor of a one-size-fits-all policy.
The best protection for workers isn’t more bureaucratic oversight, but a growing economy. This move by the EEOC is bad for the economy, and ultimately bad for women.