Pay Equity And Transparency: Expanding Obligations For U.S. Employers With EU Operations

In Short

The Situation: While U.S. states continue to legislate pay equity and transparency obligations, significant changes are on the horizon in the European Union that will impact U.S. companies with sizeable operations there. The EU Pay Transparency Directive, adopted in 2023; the EU Corporate Sustainability Reporting Directive, adopted in 2022 ("CSRD"); and the upcoming EU Corporate Sustainability Due Diligence Directive ("CS3D") all include new and far-reaching employer obligations.

The Result: In addition to the requirements under new and existing state laws, U.S.-based employers with operations in the European Union soon will be required to report on gender pay gaps and other compensation-related metrics, including in some instances reports that reflect U.S.-parent company data. Given the sweeping nature of these pay reporting and other requirements, covered employers should begin preparing now.