Equal Pay is Not a Regulatory Burden

Posted by Chris Wellens /

The Trump Administration proposes to "pause" and review an Obama-era program designed to improve wage transparency -- so women and minorities could learn how their compensation stacked up to white men. The Trump administration argues that the government's pay data collection process is "unnecessarily burdensome."

The person behind "the pause" is Neomi Rao, Trump's administrator of the Office of Information and Regulatory Affairs. Rao justified the decision by writing:

“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.”

But Rao is dead wrong; nearly all businesses use payroll systems that automatically collect the information required by pay data collection rules.

Most businesses use automated payroll systems from companies like ADP, Paychex, 101Pay, Intuit, PayUSA -- there's any of about 160 different automated payroll providers. Very large employers may conduct payroll processing in-house. These systems also track the required employee pay information. For example:

Year 2016: Name | Title | Race | Sex | Total Wages

The payroll systems automatically generate, format, and confidentially email similar reports to various government agencies. So adding one more report that should go to the EEOC is no burden on the employer whatsoever. Just like the payroll reports that go to other government agencies, this report would be in "autopilot", without any operator intervention.

Making key data elements anonymous is not supported by all the systems. For example, the systems generate a report with a line item like this:

Jane Doe | Administrator | Hispanic | Female | $50,000

However, a number of methods exist for anonymizing the data.The actual employee name could be removed, and salary replaced by a small salary range, rather than the precise salary via data fuzzing:

Administrator | Hispanic | Female | $49,500 - $50,500

Rather than the huge burden suggested by Rao imposed each reporting period on the employers, instead there's a one time programming task and software update by the payroll suppliers.

We are talking about a small amount of coding and testing. Of course, in a large company, there would have to be a "project" it would have to be staffed, scheduled, and approved. There would be a design document, an implementation plan, a testing plan, and weekly project meetings. Yet, start to finish, this is a small project. It is certainly vastly smaller than any change to the tax code and health insurance!

In addition, the payroll processing companies would love to add this new EEOC report to the package of services they provide to their clients. It gives them another another capability to offer their clients.

Most companies have probably not reviewed and analyzed their employee compensation data in this manner. The report could actually be helpful to company management in identifying sources and causes of pay disparity. A company might find, perhaps, the greatest disparity lies in one department, for example, or in one division or geographic location. It is an application of big data with potentially insightful findings.

Rao has an impressive academic background in law and policy. She seems to lack the technical knowledge required to create policy in the 21st century. This is not a regulatory burden; this is public protection. Certainly in a fair and just society we need to review and verify that women and minorities receive equal pay for equal work.

This article was originally published on 6 September 2017 on LinkedIn.

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