Uscc letter to gov newsom


September 17, 2020


The Honorable Gavin Newsom
Governor, State of California
1303 10th Street, Suite 1173
Sacramento, CA 95814

Via electronic mail:

RE: Veto of Senate Bill 973

Dear Governor Newsom:

The U.S. Chamber of Commerce urges you to veto S.B. 973 , legislation that would create
a California version of the Equal Employment Opportunity Commission’s ( “EEOC ”)
compensation data reporting form, EEO -1 Component 2 ( “revised EEO -1, or Component 2 ”).
The Chamber has opposed the implementation of the revised EEO -1 form , and our same
objections apply to the form that would be created under S.B. 973.

Attached are comments submitted to the EEOC, supported by several represen tatives of
employers, endorsing EEOC’s decision to discontinue collection of the Component 2 data.
These comments summarize arguments the Chamber made throughout the development of the
Component 2 form. Of crucial importance to whether S.B. 973 should be vetoed is that the data
collected by Component 2, and that would be collected through the process established by S.B.
973, is worthless with respect to identifying incidents of pay discrimination to the EEOC, or
would be to the California agencies, and ser ves no purpose under the laws administered by the
EEOC. EEOC now describes this data as having “unproven utility”.

The data collection process of the Component 2 form, and as envisioned by S.B. 973, is
incapable of capturing the many nuances of legitimate distinctions that comprise compensation
systems. As the attached comments describe:
The data collected under Component 2 (i.e., W -2 and “hours worked”) and the
methodology for organizing the data (i .e., EEO -1 job categories and pay bands), in
addition to the data that was not collected (i.e., legitimate pay influencing factors),
renders the data useless for purposes of evaluating an employer’s pay practices, or
identifying inappropriate compensation dissimilarities … W -2 wage data also fails to
account for the fact that some types of pay, specifically commissions and tips, are a
greater reflection of employee skill and effort than employer pay policies. Similarly,
collecting “hours worked” and “proxy hours” for exempt workers renders any analysis meaningless because such hours have no bearing on the wages included in Box 1 of the W-2. Thus, the “data” collection conducted pursuant to Component 2 has no utility.

Another key concern of the employer representatives in their comments to the EEOC is
the likelihood that sensitive data contained in the Component 2 form will be released. While the
bill has language specifying that “individually identifiable information” not be made public, that
prohibitio n only applies prior to the initiation of an investigation or enforcement proceedings.
Title VII of the Civil Rights Act has similar protections for sensitive information not being
released by the EEOC, but experience has shown that once an investigation is launched, and
launching one can be done for various reasons, protection for that sensitive information is lost.

For these reasons, the U.S. Chamber of Commerce recommends that you veto S.B. 973.


Marc Freedman
Vice Pre sident, Workplace Policy
Employment Policy Division

Uscc letter to gov newsom