In March of this year, a federal judge ordered the White House Office of Management and Budget to lift its stay of an Obama-era plan for businesses to turn over detailed pay and hours-worked data as part of their EEO-1 reporting. The purpose of the plan is to root out discrimination in pay based on race and gender. The OMB had argued that the new rule could overload businesses with paperwork. Pursuant to the court’s ruling, businesses will need to comply with the rule by reporting 2017 and 2018 pay and hours-worked data in Component 2 of the EEO-1 survey by September 30, 2019. Therefore, businesses immediately need to begin preparing to respond, in order to ensure compliance with the deadline.
To be clear, EEO-1 filers have two deadlines this year: May 31, 2019 for Component 1 (traditional) data (with an extension deadline of June 14); and September 30, 2019 for Component 2 (new) data for both 2017 and 2018. The 2018 EEO-1 survey for Component 1 (due May 31) is open already. Component 2 has many more data fields than Component 1, and the EEOC is just beginning the process of outsourcing Component 2 data collection to a third party because its own data systems are not equipped to receive the large amount of data that will be submitted. The EEOC plans to provide information and training to employers soon, and the collection portal is expected to be available by July 15.
While an appeal of the court’s decision has been filed, EEO-1 filers should assume that they will have to comply with the Component 2 reporting by September 30. Therefore, affected employers should immediately begin preparing to submit Component 2 data because capturing, analyzing, and reporting the data will likely cause unexpected burdens on various departments, including HR; IT; legal; and possibly third-party consultants, including where those consultants handle the company’s payroll and timekeeping, or where a consultant is used to help with the reporting of Component 2 data. The data required by Component 2 includes the following, broken down by race, ethnicity, and sex, within 12 proposed pay bands:
- Wage information from Box 1 of Forms W-2; and
- Total hours worked, including actual hours worked by nonexempt employees and estimates for exempt employees (20 hours per week for part-time, and 40 for full-time).
Therefore, employers have been advised to immediately begin assessing their systems, identifying systems that contain the relevant data (demographic, pay, and hours-worked data), and figuring out how to pull that information together. A possibility of an exemption based on an undue burden exists, but is not guaranteed.
Now is a good time to work with legal counsel to analyze employee pay and consider whether legitimate or discriminatory reasons have led to any wage differences. Employers still have time to make pay adjustments in an effort to reach pay equity before Component 2 data is collected.
The EEOC has begun to announce, pursuant to the court’s order, that employers who file form EEO-1 should prepare to submit EEO-1 Component 2 data, as it will be due no later than September 30 of this year. The following notice is currently on the EEOC’s website:
Notice of Immediate Reinstatement of Revised EEO-1:
Pay Data Collection for Calendar Years 2017 and 2018
EEO-1 filers should begin preparing to submit Component 2 data for calendar year 2017, in addition to data for calendar year 2018, by September 30, 2019, in light of the court's recent decision in National Women's Law Center, et al., v. Office of Management and Budget, et al., Civil Action No. 17-cv-2458 (D.D.C.). The EEOC expects to begin collecting EEO-1 Component 2 data for calendar years 2017 and 2018 in mid-July, 2019, and will notify filers of the precise date the survey will open as soon as it is available.
On May 3, 2019, the Department of Justice filed a Notice of Appeal in National Women’s Law Center. The filing of this Notice of Appeal does not stay the district court orders or alter EEO-1 filers’ obligations to submit Component 2 data. EEO-1 filers should begin preparing to submit Component 2 data as described above.
Filers should continue to use the currently open EEO-1 portal to submit Component 1 data from 2018 by May 31, 2019.
Employers should keep an eye on the EEOC’s website (and keep in close contact with legal counsel) to ensure they stay up-to-date.
The EEO-1 components apply to all employers that have 100 or more employees, as well as to federal contractors with 50 or more employees and a $50,000 or greater federal contract.