Neomi Rao testifies before the Senate Judiciary Committee during her confirmation hearing to be U.S. Circuit Judge for the District of Columbia Circuit. (Photo: Diego M. Radzinschi / ALM)

The Trump administration's move to stop an Obama-era regulation aimed at pay transparency was unlawful, and the rule requiring that employers disclose more workforce data should be reinstated, a Washington federal judge said Monday.

Judge Tanya Chutkan of the U.S. District Court for the District of Columbia said the Office of Management and Budget did not provide sufficient justification before blocking the enforcement of the Obama-era regulation, which would have expanded the scope of information that employers are required to reveal every year to the U.S. Equal Employment Opportunity Commission.

The National Women's Law Center and the Labor Council for Latin American Advancement sued the Office of Management and Budget in November 2017 after the agency put the new pay-data rule on hold. The expanded EEO-1 report would have gone into effect by the annual filing deadline in March 2018. The measure required companies to disclose pay information based on gender, race and ethnicity.

“This is vindication for those who believe pay data is key to equal pay enforcement,” Emily Martin, who oversees advocacy for the National Women's Law Center, said Monday. “It makes clear that the Trump administration's efforts to block that critical initiative were lawless.”

The EEOC recently extended the EEO-1 reporting deadline until May 31. It was not immediately known whether the Trump administration would seek to appeal Chutkan's ruling. The OMB and EEOC did not immediately respond to request for comment.

The lawsuit was filed against the OMB and the EEOC and named Mick Mulvaney, Neomi Rao and EEOC chairwoman Victoria Lipnic as defendants. Rao, head of the Office of Information and Regulatory Affairs, is awaiting a confirmation vote to a seat on the U.S. Court of Appeals for the D.C. Circuit is pending.

The new requirements were unpopular with the business advocates, who claimed implementation of the new rules would lead to administrative hassles and unfairly expose companies to liability based on allegedly misinterpreted data.

Workers' advocates argued the Trump administration did not have the right to rollback the regulation, which effectively stopped a six-year regulatory process that resulted in the new pay-data reporting rule. They plaintiffs alleged the government and the budget office buckled to pressure from business interests.

Chutkan said that the Trump administration did not take the proper steps to stay the regulation and found the conclusions, “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

The judge said OMB's “deficiencies were substantial, and the court finds it unlikely that the government could justify its decision on remand.” Chutkan said OMB “also failed to demonstrate good cause for the stay.”

“The government's deficiency is not that it failed to explain OMB's 'reasoning,' but that OMB's reasoning lacked support in the record,” Chutkan wrote in her ruling.

 

Read the ruling in National Women's Law Center v. OMB:

 

 

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