You might be one of the thousands of employers who suffered more than a few sleepless nights over the last year trying to determine whether federal law did or didn’t require your company to collect and disclose extensive amounts of employee pay data to the Equal Employment Opportunity Commission by September 30th. The entire episode caused quite a few headaches for employers but also, strangely, for members of the federal agency.
Hopefully, by now, you’ve submitted the new “Component 2” data with your company’s annual EEO-1 submission by the deadline. If not, there’s still time to report that information to the EEOC, but many employers are already wondering whether the travails of the last year will continue into the foreseeable future. While the litigation over the Obama Administration’s revisions to the EEO-1 Form and the Trump Administration’s efforts to undo those revisions is not yet resolved, this article provides employers with some guidance regarding what to look out for in the coming year so that you can be properly prepared when the next reporting deadline arrives.
By way of brief background, President Obama issued a mandate to the EEOC during his second term in office to identify and eliminate discriminatory pay practices in the workplace. In response, the agency proposed several revisions to the EEO-1 Form, which is used to annually obtain demographic information from employers relative to their employees’ race, ethnicity, sex, and job category.[1] In January 2016, the EEOC announced that, going forward, employers would also need to report data on the EEO-1 form pertaining to employee pay ranges and hours worked to “assist the agency in identifying possible pay discrimination and assist employers in promoting equal pay in their workplaces.”[2] In particular, both private employers and government contractors would be required to report the number employees (broken down by job category, ethnicity, race, and gender) that fall within twelve (12) pay ranges or “bands.” The revised form was approved by the White House Office of Management and Budget (“OMB”) for a three-year period and released on September 29, 2016. The first reporting deadline for employers was scheduled for March 31, 2018.[3]
However, after President Trump took office, OMB suspended the reporting date for the new EEO-1 information pending a review of the provision under the Paperwork Reduction Act to determine whether the new EEO-1 Form imposed an unreasonable burden on employers.[4] That move was widely celebrated by businesses and lobbying groups, such as the U.S. Chamber of Commerce. Yet, those celebrations turned out to be premature, as two months later on March 4, 2019, a federal court in Washington D.C. overturned that stay and held that the pay data collection should go forward as planned. The D.C. court then issued an order on April 25, 2019, which instructed that employers’ so-called “Component 1” data (i.e., traditional EEO-1 data) should be reported to the EEOC by May 31, 2019 and the “Component 2” data (i.e., employee pay data) should be disclosed by September 30, 2019. Although the Department of Justice appealed that order to the D.C. Circuit Court of Appeals, the EEOC made clear to employers that the reporting for calendar years 2017 and 2018 would have to be completed on time notwithstanding the pending appeal.[5]
As for what to expect next, the EEOC stated in a September 12th notice that it will not ask OMB to renew its request to collect Component 2 pay data past the expiration of the original three-year collection period.[6] Any and all public comments on that notice are due back to the agency by November 12th. If OMB approves the agency’s request, which it is expected to do, employers will not have to collect and report Component 2 pay data for calendar years 2019, 2020, and 2021, barring any further judicial intervention. However, the EEOC did request renewal of Component 1 data collection, so traditional employee demographic information reporting will continue.
In the meantime, the same federal judge who overturned the OMB’s stay of the Component 2 data collection is currently considering whether the collection period for 2018 data can end now that the EEOC has obtained data for roughly 72.7% of employers and the agency considers collection “complete.”[7] Until the court rules on the EEOC’s motion, however, employers should be aware that collection is continuing and their obligation to report Component 2 pay data for calendar years 2017 and 2018 remains in effect until further notice.[8]
Regardless of whether the EEOC ultimately drops its efforts to formally monitor employee pay data through the EEO-1 form to root out pay discrimination, employers should be cognizant of the spotlight already being shone on this aspect of their businesses. Accordingly, we recommend that employers internally audit this information, preferably with the assistance of counsel, to identify whether any pay disparities presently exist in their respective workforces. At a minimum, this will enable employers to identify any such disparities in advance of an agency investigation or lawsuit and determine whether legitimate business reasons exist to justify them. Early identification and self-scrutiny are excellent ways to avoid trouble down the road should the EEOC or a plaintiff’s lawyer come calling in a pay discrimination charge/case and demand to see that information.
If you have questions about such an audit or any other employment law matters, please contact one of Reminger’s Employment Practices Group attorneys to discuss.
[1] The Commission requires private employers with more than 100 employees, as well as federal contractors/subcontractors with more than 50 employees, to annually report information on their employees’ sex and race/ethnicity on the EEO-1 Form.
[2] EEOC Press Release, Jan. 29, 2016, EEOC Announces Proposed Addition of Pay Data to Annual EEO-1 Reports, available at https://www.eeoc.gov/eeoc/newsroom/release/1-29-16.cfm. As EEOC Chair Jenny R. Yang stated, “Collecting pay data is a significant step forward in addressing discriminatory pay practices.”
[3] Christina A. Pate, New EEO-1 Report Finalized: Employers Required to Report Pay Data Starting with 2017 Report, The National Law Review (Oct. 3, 2016), http://www.natlawreview.com/article/new-eeo-1-report-finalized-employers-required-to-report-pay-data-starting-2017.
[4] Stephen Miller, White House Suspends Pay-Data Reporting on Revised EEO-1 Form, SHRM.org (Aug. 31, 2017), https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/revised-eeo-1-form-suspended.aspx.
[5] EEO-1 Survey, EEOC.gov, https://www.eeoc.gov/employers/eeo1survey/ (last visited Oct. 28, 2019).
[6] Notice of Information Collection Activities Regarding the Employer Information Report (EEO-1), 84 Fed. Reg. 48138 (Sept. 12, 2019).
[7] Robin E. Shea, EEO-1 Pay Data Collection is Complete?, JDSupra.com (Oct. 23, 2019), https://www.jdsupra.com/legalnews/eeo-1-pay-data-collection-is-complete-50327/.
[8] EEO-1 Survey, EEOC.gov, https://www.eeoc.gov/employers/eeo1survey/index.cfm (last visited Oct. 28, 2019) (“Employers, including federal contractors, are required to submit Component 2 compensation data for 2018 if they have 100 or more employees during the 2018 workforce snapshot period. The workforce snapshot period is an employer-selected pay period between October 1 and December 31 of the reporting year.”).
