PAY EQUITY
LOOKING AHEAD TO 2025
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2024 PREDICTIONS RECAP
Trump Administration Won’t Pursue Pay Equity Initiatives We expect the incoming Trump administration not to pursue new pay equity initiatives – or even block them altogether. As mentioned, in 2017, the Trump administration dropped the revised EEO-1 report that the Biden EEOC is now seeking to revive. Trump officials cited concerns that the move to collect pay data lacked practical utility, would be unnecessarily burdensome, and failed to adequately address privacy and confidentiality issues. It seems unlikely that his position would have changed on this proposal, especially given the trend against expansion of agency power we have seen take root in the past year. States Will Step Up Their Game As you know, pay transparency was a hot topic in 2024 with lots of movement at the state level. We expect the momentum to continue in 2025. We predict that even more states will pass laws requiring employers to disclose salary ranges in job listings, among other related requirements. These laws affect all aspects of workplace relationships – including hiring, recruitment, and retention efforts; supervision and leadership; and compensation and benefits. So, you should be sure to track developments in the locations where you operate. Pay Data Reporting Will Be Required in More Cities and States We expect New York City to finalize its pay data reporting bill – and we also think more cities and states will mandate pay data reporting in response to the federal government shifting focus away from these initiatives. Rise in Pay Equity Litigation Failure to comply with state pay transparency laws has begun to spawn costly litigation across the country. As states become more active in passing and enforcing pay transparency laws, we expect to see a major surge in litigation over these rules. Thus, you’ll want to work with legal counsel to create a compliance plan and review your policies to ensure they are up to date.
More States Join the Pay Transparency Trend We were right that more states would enact pay transparency requirements in 2024. Indeed, we saw a flurry of activity as New Jersey, Massachusetts, Vermont, Minnesota, and Maryland joined the trend. Illinois also has a pay transparency law that will take effect in the new year. These laws highlight the importance for multistate employers to develop uniform pay disclosures for job postings and advertisements. Many employers have also worked with legal counsel to conduct a privileged pay audit, and you may want to consider doing the same. EEO-1 Reporting Changes Annual EEO-1 reporting is required for nearly all employers with 100 or more employees and for many federal contractors or subcontractors with at least 50 employees. We expected the Biden administration to make some key changes to reporting requirements in 2024, and while they pushed for changes, many of these changes haven’t been finalized. For example: • Race/Ethnicity Categories: As we predicted, in March the federal government changed how it categorizes people by race and ethnicity for the first time in over 25 years. The goal is for agencies like the EEOC and OFCCP to more accurately collect and report data. Notably, however, federal agencies were given 18 months to submit a compliance plan – so we’re still waiting for the EEOC and OFCCP to adopt these changes. • Pay Data Reporting: According to a regulatory agenda released in July, the EEOC is seeking to revive Component 2 pay data collection as part of the annual EEO-1 submission, which is highly contested by the employer community. Covered employers had to briefly submit this compensation information a few years ago after a contentious legal battle on the issue, but the Trump administration dropped the requirement to report pay data. We accurately predicted that the Biden administration would aim to pick this up again, but we expect the Trump administration to abandon the effort.
MORE OF 2024 IN REVIEW
NYC Poised to Have Most Stringent Pay Data Reporting in Nation A bill proposed in the New York City Council in July would amplify pay equity and transparency efforts by requiring employers with 25 or more employees who work within the five boroughs to comply with stringent pay and demographic data reporting rules. The State of New York requires that employers ensure equal pay for equal or substantially similar work and prohibits wage discrimination based on many protected categories, and both the State and New York City have recently implemented pay transparency laws requiring certain wage disclosures on job postings. But this NYC law would take the goal of pay equity to the next level.
HOW’D WE DO ON OUR PREDICTIONS?
We got the predictions MOSTLY RIGHT
Kathleen McLeod Caminiti
Lonnie D. Giamela
New Jersey/New York Partner and Co-Chair, Pay Equity Practice Group kcaminiti@fisherphillips.com
Los Angeles/Irvine Partner and Co-Chair, Pay Equity Practice Group lgiamela@fisherphillips.com
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