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'Victory for equal pay’: Judge rules Trump administration must require companies to report pay by gender, race

President Trump speaks to the National Association of Attorneys General on March 4, 2019, at the White House. (Jacquelyn Martin/AP)
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A federal judge on Monday ordered the Trump administration to reinstate an Obama-era rule that required companies to report pay data by race and gender, a move advocates say will help shrink the wage gap.

Tanya S. Chutkan, a U.S. district judge for the District of Columbia, ruled that the Trump administration violated the law when it halted the Equal Employment Opportunity Commission’s efforts to collect pay data by race and gender from large companies. In defending its decision to freeze the rule, Chutkan wrote, the government failed to demonstrate that the requirements would “meaningfully increase the burden on employers.”

Chutkan ordered the government to move forward with collecting the data, a decision that women’s rights groups hailed as a crucial step toward fighting employer discrimination of women and minorities.

“This is a really important victory for equal pay and for holding the administration accountable under the law," said Maya Raghu, senior counsel and director of workplace equality at the National Women’s Law Center, one of the groups that sued the Trump administration over its move to block the wage data rule.

Representatives from the EEOC and the Office of Management and Budget did not respond to requests for comment Tuesday. It is unclear whether the government plans to appeal the judge’s ruling.

The rule, which was finalized in September 2016, required firms with 100 or more employees to provide additional employee and salary information to the EEOC on an existing form, known as the EEO-1. Companies would have been required to submit their reports by March 31, 2018.

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The revised data collection was aimed at helping the EEOC more effectively identify problems with pay discrimination within companies and industries, said Jenny R. Yang, who shepherded the changes as the chair of the EEOC under President Barack Obama. “Without that information, even if someone has a pay discrimination issue but doesn’t have the data, it can be much harder for the agency to quickly make the determination," Yang said.

The rule also created an incentive for an employer to “look under the hood” and evaluate their own pay practices, Yang said. The EEOC planned to then publish the aggregate data publicly, allowing employers, advocates and academics to benchmark pay inequities in the workforce, said Yang, who is now a strategic partner at Working Ideal and a fellow at the Urban Institute.

But the data collection requirement was met with intense criticism from the U.S. Chamber of Commerce and other industry groups that argued it put an unfair and expensive burden on employers. While the EEOC estimated the data collection would cost $25 million a year, or about $416 per company, the Chamber of Commerce claimed it would carry a total burden of $1.3 billion per year for all businesses with 100 or more employees, with “no accompanying benefit."

Then, in August 2017, Neomi Rao, then the administrator of the Office of Information and Regulatory Affairs, sent a memorandum to Victoria Lipnic, the Acting Chairwoman of the EEOC, stating that the Office of Management of Budget had decided to freeze the EEOC’s new collection of pay data.

Rao, who is now President Trump’s nominee to replace Supreme Court Justice Brett M. Kavanaugh on the U.S. Court of Appeals for the District of Columbia Circuit, wrote in the memo that “aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.”

The move, one of many attempts by the Trump administration to dismantle Obama-era regulations, drew outrage from dozens of civil rights groups and women’s advocacy groups. Much of the ire was directed at Ivanka Trump, who supported the decision to freeze the rule despite billing herself as an advocate for policies supporting women in the workplace.

The National Women’s Law Center, along with the Labor Council for Latin American Advancement and Democracy Forward, then filed a lawsuit arguing in part that the government failed to consult with equal-pay advocates before halting the data collection. The plaintiffs claimed the government had significantly hampered their ability to pinpoint pay inequities and use data and analysis to advocate on behalf of women and minorities.

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The judge on Monday sided with the plaintiffs, saying the government did not sufficiently demonstrate the data collection would create a burden for employers.

“The government’s position rests on hyper-technical formatting changes that have no real consequences for employers,” Chutkan wrote. “While there may be instances when formatting changes could be burdensome, that is not the case here.”

Raghu, of the NWLC, said she hopes the data collection will motivate employers to take steps to correct pay disparities and end practices such as basing employees’ salaries on what they made in previous jobs.

Huge racial and gender wage gaps persist in the United States. All gender, racial and ethnic groups, with the exception of Asian men, lag behind white men in median hourly earnings, according to the Pew Research Center. In 2017, women earned 82 percent of what men earned, meaning it would take an extra 47 days of work for women to earn what men did, according to a Pew analysis.

Yang said pay inequity is the area in which the EEOC made the least progress during her time there, in large part because the agency lacked the data to understand where the problems were. Collecting this wage data by race and gender, Yang said, might help shift the culture of secrecy around pay.

“The way we’d learn about a pay discrimination problem was by chance,” such as an overheard conversation in the workplace, Yang said. “We can’t let equality be left to chance."