President Trump is shelving a proposal from the Obama administration requiring large employers to report salary data based on sex and race, which would have enabled the federal government to crack down on pay disparities between men and women.
The White House Office of Management and Budget notified the Equal Employment Opportunity Commission on Tuesday that it has decided to “stay” and review the proposed regulation, which was issued by President Barack Obama last September.
OMB said it is concerned that collections of the additional information from employers “lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues,” said Neomi Rao, administrator of the White House Office of Information and Regulatory Affairs.
Businesses objected loudly last year when Mr. Obama announced the proposed rule, saying it would let the government stick its nose into how salaries are set in the private sector.
The revised “EEO-1” form had not yet been issued to employers, but a senior administration official said companies would have needed to start “ramping up” compliance efforts next month to prepare for the additional paperwork requirements, which by one estimate would have cost employers $400 million collectively.
In an unusual step, the White House issued a statement from presidential daughter and adviser Ivanka Trump supporting the move. Ms. Trump is a prominent voice in the West Wing advocating for women in the workplace.
“Ultimately, while I believe the intention was good and agree that pay transparency is important, the proposed policy would not yield the intended results,” Ms. Trump said. “We look forward to continuing to work with EEOC, OMB, Congress and all relevant stakeholders on robust policies aimed at eliminating the gender wage gap.”
Small Business Administrator Linda McMahon also said she supports the move because the revised EEOC form would have “harmed” efforts to promote pay equity.
“Almost every large business started small, and there is no better way to arrest the ambitions of America’s entrepreneurs then to saddle their vision with the burden of unnecessary regulation,” she said. “The effort to prevent gender discrimination is an important public policy goal of this administration, of state and local government, and for myself as an advocate of girls and women in business and as a former female business owner. That noble pursuit is harmed — not helped — by the revised EEO-1 form, which is why I support the stay and review.”
The White House also said the proposed rule on salary data doesn’t meet the standards of the Paperwork Reduction Act of 1995, which requires agencies to obtain OMB approval before requesting most types of information from the public.
Mr. Obama announced his intention to implement the new rule in January 2016, requiring employers with more than 100 workers and federal contractors with more than 50 employees to report salary data based on race, sex and ethnicity.
The data would have enabled the EEOC to investigate and sue companies paying women less than their male counterparts, and also to litigate pay disparities between minorities and white employees.
The move did not require congressional approval.
In April, Sen. Lamar Alexander, Tennessee Republican and chairman of the Senate Health, Education, Labor and Pensions Committee, wrote with Sen. Pat Roberts, Kansas Republican, asking the White House to rescind the Obama administration’s proposal due to the added burdens it would place on employers.
The lawmakers said the revised EEOC form would increase by 20 times the amount of employment data collected from 61,000 private employers on their 63 million employees.
“These revisions will please significant paperwork, reporting burdens, and new costs on American businesses, and will result in fewer jobs created and higher prices for American consumers,” the senators wrote, adding that the U.S. Chamber of Commerce estimated the cost of compliance at more than $400 million annually.
Mr. Obama frequently raised the complaint publicly that the average U.S. female worker makes 77 percent of what the average male employee does.
“The notion that we would somehow be keeping my daughters … any of your daughters out of opportunity, not allowing them to thrive in any field, not allowing them to fully participate in every human endeavor, that’s counterproductive,” Mr. Obama said at the time.