Temperatures Rise for Employers as Requirement for Additional EEOC Pay Data Looms   

Employers in the process of preparing their EEO-1 reports for submission by the May 31 deadline may now be scrambling to comply with additional onerous reporting requirements on short notice after D.C. District Court Judge Tanya Chutkan’s decision in National Women’s Law Center v. OMB breathed new life into what was believed to be a defunct revision to the report.

The annual EEO-1 report is nothing new to companies with over 50 employees. Employers have long been required to provide the number of individuals employed in various job categories by sex, race, and ethnicity on an annual basis. The Obama-era EEOC had attempted to revise its EEO-1 form through a rule issued in 2016. The revised data collection form would have required employers to also report W-2 wages and hours worked for all employees within 12 pay bands for each of the 10 EE0-1 job categories. This revision was intended to facilitate the commission’s enforcement of equal pay laws and investigation of discriminatory pay practices. The change was originally scheduled to go into effect in 2018. 

However, in August 2017, the Office of Management and Budget (OMB), by then controlled by Trump appointees, intervened before the new requirements could go into effect and “froze” the rule implementing the new format. At the time, there was a collective sigh of relief amongst some employers, who perceived the updated EEO-1 form as invasive and burdensome. OMB issued a memorandum explaining its rationale for the freeze on the rule. Per OMB, it was “concerned that some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.” Specifically, OMB took issue with certain EEOC data file specifications for employers to use when submitting their EEO-1 reports. OMB took the position that “the public did not receive an opportunity to provide comment on the method of data submission to EEOC” and that the revised aspects of the EEO-1 form should be stayed until further notice. The EEOC did not oppose this action.

Several women’s advocacy groups, however, filed suit against OMB in November 2017 claiming that the pay data reporting freeze was improper and that it prevented them from being able to accurately evaluate pay disparities and better serve their clients. In the National Women’s Law Center decision, Judge Chutkan lifted the stay because, in her view, OMB did not sufficiently demonstrate the data collection would create a burden for employers. Chutkan opined that, “OMB’s stated reason when issuing the stay … conflicted with its prior findings that EEOC’s data collection had practical utility … was designed to minimize the burden on reporting employers … and provided adequate privacy and confidentiality protections.”  “OMB,” she admonished, “failed to explain these inconsistencies.” “The government’s position rests on hyper-technical formatting changes that have no real consequences for employers,” Chutkan wrote. “While there may be instances when formatting changes could be burdensome, that is not the case here.”      

It remains unclear whether and when employers will actually have to comply with the revised EEO-1 requirements. OMB is expected to appeal this ruling that could further stay the pay data collection requirements. In any event, EEOC may not require that the information be collected and submitted this May, given the close proximity of the D.C. Circuit’s ruling to the current report filing deadline. It is also possible that EEOC will extend the filing deadline past May 31 in order to give employers time to gather and submit this additional pay data. Given the uncertainty of the rule’s implementation, employers are well advised to start gathering this additional pay data along with the original job category, sex, race, and ethnicity data the EEO-1 form has always required. At the very least, employers should review their internal reporting systems to ensure they are able to produce the requested pay data until the EEOC provides further clarification.

 


Authors

Danielle Harris

Associate

danielleharris@cozen.com

(312) 474-1627

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For any questions or assistance, please contact Danielle Harris or any other Cozen O'Connor Labor & Employment department member.