EEO-1 report filers should prepare to submit Component 2 pay data for both calendar years 2017 and 2018 by September 30, 2019. As we previously reported, the U.S. District Court for the District Court of Columbia previously ruled that employers must submit pay data for calendar year 2018 by September 30, 2019. In this ruling, the court also presented the EEOC with the option to either collect pay data for calendar year 2017 or calendar year 2019. The EEOC recently announced that it will collect pay data for calendar year 2017. Pay data for both 2017 and 2018 will be due September 30, 2019.
The EEOC will begin collecting employer’s pay data for 2017 and 2018 beginning in mid-July 2019. Filers should continue to use the EEOC’s online portal to report Component 1 data of the EEO-1 reports, which is due by May 31, 2019 unless the employer has received an extension.
In light of the September 30 deadline, employers should
begin preparing to submit their pay data – a new process that, for many
employers, requires compiling information from two different systems if payroll
records are maintained separately from a human resources information
system. Recent court rulings and EEOC
decisions have created a bit of a moving target as employers work to comply
with this new EEO-1 reporting obligation. While we await further information
and guidance from the courts and the EEOC, it is helpful to look to the previously
approved plan that the EEOC had in place in January 2016 prior to the OMB’s
stay as a reference point:
to file Component 2 pay data? EEO-1
filers with 100 or more employees (both in the private industry and federal
contractors and subcontractors)
data will be collected? The EEOC sought to collect aggregate W-2 data in 12
pay bands for the 10 EEO-1 job categories. The EEOC advised that employers
“will simply count and report the number of employees in each pay band. For
example, a filer will report on the EEO-1 that it employs 3 African American
women as professionals in the highest pay band.”
employers also need to report the hours worked by employees? Yes. The EEOC
previously stated that hours-worked data will be reported to account for
part-time and partial year employment. The EEOC indicated that it would allow
employers to use a proxy of 40 hours per week for full-time employees who are
exempt under the Fair Labor Standards Act if the employer does not maintain
accurate records on hours worked for these employees.
Should employers track the staff time spent to collect and report this pay data? Yes. The EEOC had previously indicated that it would request employers to provide the amount of time spent on complying with Component 2 obligations in order to quantify this survey’s burden on employers.
What will the EEOC do with this pay data? The EEOC has previously suggested that it will use the pay data to improve its enforcement efforts to combat pay discrimination, identify trends, and help employers assess their pay policies and practices. While the EEOC represented that EEO-1 pay data will not be used as the sole basis to find discrimination, the agency stated that the data will be used to better focus its resources and investigations, and that a finding of discrimination could come after an investigation. Employers should audit their pay practices in advance of submitting the EEO-1 pay data. Following the audit, employers should remedy any pay inequities for female or minority workers completing the same work as others outside their protected classes, if the disparate pay cannot be easily explained by a legitimate, lawful reason.
On April 25, 2019, the U.S. District Court for the District of Columbia ruled that employers must submit pay data by September 30, 2019. For a more detailed background on the case at issue, National Women’s Law Center v. Office of Management and Budget (OMB), please see our blog from last month. As a brief background, years ago the U.S. Equal Employment Opportunity Commission (EEOC) set out to collect pay data from employers in an effort to identify and address pay discrimination against women and minority workers. The EEOC already collects data from employers regarding the sex, race, and ethnicity of employees in various job categories (Component 1 of EEO-1 report). In order to also collect pay data (Component 2 of EEO-1 report), the EEOC needed permission from the OMB.
The OMB initially approved the
pay data collection, and then stayed its permission in 2017 bringing the EEOC’s
pay data efforts to a halt. Women and minority workers advocacy groups filed a
lawsuit in the D.C. Circuit court to vacate the OMB’s self-imposed stay. In
ruling on motions, the court asked the EEOC to provide guidance on an
acceptable deadline by which it would be able to implement collecting pay data
from employers. The EEOC said it would not be able to collect this data any
earlier than September 30, 2019, and in doing so would need to rely on an
outside contractor to perform the data collection.
On April 25th 2019
Court Order requires the EEOC to do the following:
The EEOC must collect EEO-1 Component 2 pay data
for calendar year 2018 by September 30, 2019.
In addition to the pay data for calendar year
2018, the court ordered that the EEOC must either collect:
EEO-1 Component 2 pay data for calendar year 2017 by September 30, 2019; OR
EEO-1 Component 2 pay data for calendar year 2019 in the 2020 EEO-1 reportingperiod.
The EEOC must alert
the court by May 3, 2019 if it elects to collect 2019 pay data in lieu
of 2017 pay data.
The court ordered that OMB’s approval of EEOC’s
pay data collection shall expire on April 5, 2021.
Stay tuned as the EEOC is
expected to provide further guidance on its pay data collection soon. In the meantime, employers should plan on
submitting Component 2 of the EEO-1 reports for calendar year 2018 by September
30, 2019, and ensure that it submits Component 1 of the EEO-1 reports for
calendar year 2018 by May 31, 2019.
On April 3, 2019, the EEOC informed a federal district court
that the earliest it could complete its collection of pay data from covered
employers as part of their EEO-1 data reporting obligations is September 30,
2019. The court still needs to rule on the EEOC’s proposed plan and, therefore,
employers have not received a final deadline by which to file the required pay
data. However, this filing brings employers one step closer to an answer for an
issue that has caused them justified concern given the significant time and
resources that will be needed to collect this pay data.
Here is a quick refresher on the
course of events that led up to the EEOC’s April 3 filing:
Since 1966, the EEOC has required covered employers to submit an Employer Information Report EEO-1 form, providing data on the number of individuals employed by job category, sex, race, and ethnicity (known as Component 1 of the EEO-1 report). More information on Component 1 reporting can be found in one of our previous blog posts.
In 2010, the EEOC commissioned a study to identify ways to improve prohibiting pay discrimination and found that there was potential value in collecting pay data in connection with the EEO-1 reports.
In order to collect this type of data, the EEOC needed approval from the Office of Management and Budget (OMB). In September 2016, the OMB approved the EEOC’s proposed collection of pay data (known as Component 2 of EEO-1 reports). Under this approval, employers would first be required to submit the required pay data by March 2018.
In August 2017, the OMB stayed the implementation of Component 2 of the EEO-1 reports, with instructions that employers still comply with Component 1 reporting requirements.
In November 2017, two non-profit organizations that advocate for equal pay for women and Latino workers filed a lawsuit, National Women’s Law Center et al. v. OMB et al., challenging the stay in the U.S. District Court for the District of Columbia.
In March 2019, the court vacated OMB’s stay of the Component 2 reporting requirement and provided that the OMB’s prior approval of the EEOC’s collection of pay data “shall be in effect.”
The court then asked the EEOC to propose how it would undertake and close the collection of pay data now that Component 2 requirements are back in effect.
That brings us to the EEOC’s
recent April 3 filing. The EEOC informed the court that its current data
processes are not capable of collecting employers’ Component 2 data.
Instead, the EEOC will need to rely on an outside data and analytics
contractor. The EEOC warned that an expedited collection of this pay data may produce
poor quality data for the 2018 calendar year, and that quality concerns will be
compounded if employers are also required to provide pay data for calendar year
2017. The court still needs to decide several unanswered questions, such as
when employers need to submit their pay data, when the EEOC needs to complete
its data collection, and whether employers need to submit pay data for 2017.
Check back on this blog for updates.
In the meantime, all employers
should ensure that they meet the May 31, 2019 deadline for providing Component
1 of the EEO-1 reports and begin the significant effort of preparing the pay
data that will ultimately need to be submitted.