New EEO-1 Pay Data Reporting Requirements Impose Additional Burdens On Employers.
(May 23, 2019) - The Equal Employment Opportunity Commission (EEOC) requires that private employers with over 100 employees and certain federal contractors with 50 or more employees provide data regarding the number of employees by job category, race, ethnicity, and sex in EEO-1 Reports. Following a recent United States District Court opinion and subsequent statements by the EEOC, these employers must now provide additional data related to hours worked and pay data for 2017 and 2018 by September 30, 2019.
New Reporting Obligations
In September 2016, the Office of Management and Budget (OMB) approved the collection of pay data as part of the EEO-1 report. Specifically, employers would be expected to provide data identifying the wage information from Box 1 of employee W-2 forms and total hours worked for all employees, broken down by race, ethnicity, and sex, within twelve pay bands. The EEOC has argued that collection of this pay data would assist with identifying pay inequalities on the basis of race, ethnicity, and sex, and target specific employers and industries for investigations.
Approximately one year after the OMB approval of the new pay data collection, the OMB stayed the implementation of the collection. In November 2017, two non-profit organizations sued the OMB in the United States District Court for the District of Columbia. On March 4, 2019, the court held that the OMB provided inadequate reasoning to support its decision to stay implementation of the collection, and ordered that the collection go into effect. The court also ordered the EEOC to collect a second year of pay data, and offered the EEOC the option of collecting data from 2017 or 2019. The EEOC chose to collect data from 2017.
What does this mean for employers?
Private employers with over 100 employees and federal contractors with 50 or more employees and a contract with the federal government of $50,000 or more must submit data relating to the number of employees by job category, race, ethnicity, and sex by May 31, 2019, consistent with past years. In addition, employers must submit the new data relating to pay and hours worked for 2017 and 2018 by September 30, 2019. The traditional EEO-1 report has been referred to as Component 1, while the new EEO-1 with pay data and hours worked has been termed Component 2. The EEOC anticipates opening the portal for submission of this additional data by mid-July 2019. The OMB has appealed the district court order, but the EEOC has issued a statement that the appeal does not stay the district court’s orders. Employers should begin securing and preparing this information early, and anticipate producing this information by September 30, 2019.
The EEOC has previously released aggregated data by geographic region and industry, and now intends to release aggregated pay data based on Component 2. There is concern that the aggregated data could be scrutinized to determine individual pay bands where there is a small sample size. For instance, the pay band, as separated by race, ethnicity, and gender, may identify employees in Category 1 (Executive/Senior Level Officials and Managers) of a specific company, when broken down by industry and region where there is a small sample size. Additionally, EEO-1 reports are increasingly not exempt from Freedom of Information Act (FOIA) requests. There is a similar concern that covered employers will be required to provide their EEO-1 reports with pay data as part of discovery in Equal Pay Act claims. Pay information that separates by race, ethnicity, and gender could be the basis of a class action equal pay claim. Covered employers should consider conducting a pay equity audit to ensure there is no disparate impact in terms of pay practices, and rectify any pay differences that cannot be justified in a non-discriminatory manner.
Our Labor & Employment attorneys are available to answer any questions regarding the new EEO-1 reporting requirements and the anticipated effects of the EEOC’s collection of this data.
Ashleigh Reif Kasper, Associate
Nicholas B. Haynes, Associate