May 6, 2019 – Original Content from McGuire Woods
On April 25, a federal court revived a 2016 Obama administration requirement that certain employers must report pay data to the U.S. Equal Employment Opportunity Commission (EEOC). The Trump administration shelved this requirement in 2017, prompting litigation, which resulted in the April 25 court order reinstating the requirement. Certain employers now have until Sept. 30, 2019, to report this data.
The Obama Administration’s Pay Data Collection Rule
Prior to 2016, certain employers were required to report sex, race and ethnicity statistics for their workforce. The EEOC collected this data on EEO-1 forms. This “Component-1” data requirement applied, and still applies, to (i) employers with 100 or more employees and (ii) federal contractors with 50 or more employees and contracts worth $50,000 or more. Each covered employer must file an EEO-1 by May 31 of each year. Under these EEOC rules, covered employers are required to include the sex, race and ethnicity composition of their workforce, and how these groups are represented across 10 job categories identified by the EEOC.
In 2016, and in response to concerns over the gender pay gap, the EEOC sought to expand employers’ reporting requirements. Specifically, the EEOC proposed requiring pay and hours-worked data on EEO-1 forms. As explained in McGuireWoods’ Feb. 2 and July 15, 2016, legal alerts, this rule would have required employers to categorize employees into 12 pay bands based on their W-2 earnings during the previous year, and report the number of employees of each race, ethnicity, gender and EEO-1 job category that fall into each of these 12 pay bands. Presumably, this new data would allow the EEOC and other federal agencies to better identify pay disparities and create solutions to eliminate them. The Obama administration’s Office of Management and Budget (OMB) approved implementing these expanded reporting requirements in 2016.
In August 2017, under Trump administration leadership, the OMB stayed those efforts, as explained in a McGuireWoods legal alert at the time.
Employee and minority rights advocates sued the OMB in 2017 in federal court in Washington, D.C., to enforce the Obama administration’s rule. On April 25, the court in National Women’s Law Center v. OMB vacated the OMB’s stay and ordered that the expanded EEO-1 reporting requirements go into effect immediately. The court ordered the EEOC to collect 2018 Component 2 data and gave the EEOC the option of collecting either 2017 or 2019 Component-2 data. On May 2, the EEOC opted to collect 2017 Component-2 data, making this data due Sept. 30 of this year.
What Employers Should Do
This court order requires employers to do the following:
- Report traditional Component-1 data for 2018 by May 31, 2019.
- Report new Component-2 pay and hours-worked data for 2017 and 2018 by Sept. 30, 2019.
Employers can report Component-1 data through the EEOC’s online EEO-1 Survey portal. The portal for Component-2 data submission, however, is not open yet. The EEOC has not specified an opening date but has stated it will inform employers of this date soon.
The OMB may opt to appeal this court decision. However, until it does, and unless an appellate court issues a stay, the Sept. 30 deadline remains in effect.
Therefore, it would be prudent for employers to locate and compile the 2017 and 2018 hours and pay data required by the EEOC rule now and prepare to report it by Sept. 30. Given the 10 job categories and 12 pay bands for which employers will now be required to report data, collecting and reporting this information could be a confusing and onerous task.
There are no fines associated with noncompliance with this rule. However, if the EEOC discovers that an employer has failed to comply, it can ask a court to compel compliance with its reporting obligations, shining an unwanted spotlight on an employer’s employment practices. For federal contractors, noncompliance can also lead to a notice of violation, and associated penalties, during an audit by the Office of Federal Contract Compliance Programs.
To learn more about how to comply with the new reporting requirements, please contact the authors, your McGuireWoods contact, or a member of the firm’s labor and employment group.
