In honor of Groundhog Day, NCA is offering another reason why protecting your club’s private status is critical to our industry. The White House recently announced that the Equal Employment Opportunity Commission (EEOC) is devising a rule with the Department of Labor requiring businesses with more than 100 employees to report pay by race, ethnicity and gender. This is part of a larger effort to close pay gaps and identify discrimination in the workplace.
Although the rule is still being drafted and has not yet been proposed by the EEOC, it is NCA’s expectation that clubs that are truly private would not have to report this information as their private status protects them from such mandates. Therefore, it serves as a cautionary reminder that private status is of utmost importance to the industry.
Businesses Criticize Potential Rule
This potential rule has already been lambasted by businesses. Aside from the increased administrative burdens the rule would create, employers claim that it raises major privacy issues regarding their businesses and employees. Organizations and staff may not be comfortable with pay, gender and ethnicity information being reported to the federal government. And divulging sensitive information may raise concerns as businesses in the same industry could now see what others pay their workers.
The rule would also make businesses more vulnerable to litigation and investigation. As described, the rule would force employers to report employees’ race, ethnicity and gender along with their respective income. Jenny Yang, EEOC Chairwoman, says that this information will be used in order to aid investigations, assess complaints and identify pay disparities.
Businesses have raised the concern that information regarding race, ethnicity and gender alone is not sufficient in determining whether an employee is being discriminated against or not, according to The Hill. The rule does request compensation data over a broad range of job categories, including professionals, technician and sales employees. However, thus far it does not consider key wage determining factors, such as experience and geographic location, says the Retail Industry Leaders Association. Without more detailed information, the potential reporting rule may lead the EEOC to act on insufficient data and conduct unnecessary investigations.
For example, two employees, of the same job category and of different genders, may receive different pay based solely on experience. Unfortunately, under this rule the EEOC may not initially consider experience and could incorrectly investigate a business under the false pretense of wage discrimination based on gender.
Private Status Matters
As stated, it is NCA’s expectation that truly private clubs will be exempt from this rule. However, failing to protect your club’s private status rules will cause a club to disclose this information just as every other business will have to do. Such a new government requirement will mean incurring increased administrative costs as well as opening the door to unnecessary litigation and penalties.
While the government continues to search for ways to further burden employers and to open the door for public and private claims of workplace wage discrimination, it is more critical than ever that clubs work hard to maintain their private status. The quickest and most effective defense for a club when faced with any discrimination claim is to prove that it is truly private.
NCA’s publication entitled Private and Tax Exempt Status is a great resource for clubs as they review their private status and work to maintain it, and the “Private Status Checklist” provides an easy-to-use overview to protect your private status.
Private clubs have always worked to ensure their employees are compensated fairly and in a nondiscriminatory way for all. However, the approaches the EEOC intends to take with this new rule will create unnecessary burdens for businesses and provide ineffective solutions to wage gap concerns. While we work to to oppose the EEOC’s new rule, please be sure your club focuses on protecting its private status to avoid this and many other overreaches by the federal government
If you have any questions regarding this matter and private status issues, please contact NCA VP of Government Relations and General Counsel Brad Steele at [email protected].
Phillip Mike is NCA’s Senior Communications Manager