The Trump administration blocked Obama-era rules that would have saddled employers with hundreds of millions of dollars in compliance costs and increased paperwork loads by millions of hours each year.
The Office of Management and Budget instructed the Equal Employment Opportunity Commission to shelve a rule change that would have required employers to submit 20 times as much data to the agency as previously required. The Obama administration called for the new standards, which would have affected 61,000 American companies with more than 100 workers and federal contractors with more than 50 workers, to demonstrate his commitment to closing the much-disputed "gender wage gap." Obama's EEOC called for businesses to provide 3,660 different data points about each employee and their pay structure, up from the 188 points.
OMB issued the stay because of its concerns that the new forms would prove "unnecessarily burdensome" on businesses, while not achieving its desired goal of eliminating purposeful discrimination. It also said the EEOC rules could invade the privacy of individual workers without adequate protections in place.
"OMB is concerned that some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues," Office of Information and Regulatory Affairs Administrator Neomi Rao said in an Aug. 29 memo.
The agency conducted a review of the rules, but did not provide all of the specifics of its data collection methods during public comment period to get feedback from employers. OMB said the EEOC's omission could have led it to vastly underestimating the costs associated with adding nearly 3,500 new data points to the existing forms. The agency estimated the new regulations would cost employers $53.5 million and take about 1.9 million hours to complete. Those numbers paled in comparison to the findings of a survey conducted by the Chamber of Commerce, which estimated the regulations would cost $400 million and increase work hours by 8 million—if additional overhead is taken into account the rules could cost up to $1.3 billion.
"The public did not receive an opportunity to provide comment on the method of data submission to EEOC. In addition, EEOC's burden estimates did not account for the use of these particular data file specifications, which may have changed the initial burden estimate," the memo said.
The Chamber of Commerce said that the EEOC did not do its due diligence to assess the cost associated with the rule.
"The fact that the burden estimates were so defective was particularly unacceptable given the lack of utility of the information being collected by EEOC," Chamber Senior Vice President Randy Johnson said in a release.
Sen. Lamar Alexander (R., Tenn.), chairman of the Senate Committee on Health, Education, Labor, and Pensions, called on the Trump administration to block the rules in an April letter. He welcomed the OMB decision in a statement, saying the EEOC should use its resources to address a "backlog of more than 73,000 unresolved complaints of discrimination," rather than engage in new rulemaking.
"This agency is supposed to be protecting American workers from discrimination. Instead the EEOC came up with an absurd mandate forcing employers to submit new pay data on 63 million private sector employees," Alexander said in a statement. "The Trump administration has done the right thing today so EEOC can think critically about what data it should require of employers and begin to work through its backlog of more than 73,000 unresolved complaints of discrimination."
The move drew criticism from feminist groups. Nita Chaudhary, co-founder of UltraViolet and a veteran of MoveOn.org, called the roll back a "setback for equality."
"The Trump administration's announcement is a setback for equality and will worsen this country's pay gap," she said in a statement. "The very purpose of pay data collection is to ensure against wage discrimination targeting women and people of color."
Acting EEOC Chairman Victoria Lipnic said the agency remains committed to fighting pay discrimination and pledged to work with Congress and businesses to address the issue of pay.
"The EEOC remains committed to strong enforcement of our federal equal pay laws, a position I have long advocated," she said in a statement. "I do hope that this decision will prompt a discussion of other more effective solutions to encourage employers to review their compensation practices to ensure equal pay and close the wage gap."
Employers will still have to submit data focusing on race and gender using the 188-point forms by March 31, 2018, six months after the originally scheduled Sept. 30 deadline.