Revised EEO-1 Requirements Take Effect: Employee Pay Data Must Be Submitted to EEOC by September 30
On April 25, 2019, a federal district court ruled that employers must provide pay data to the Equal Employment Opportunity Commission (EEOC) by September 30, 2019. This ruling is the latest decision in a years-long battle over whether (and when) employers are required to report pay information based on sex, race, and ethnicity to the EEOC.
The EEOC has long required employers to report data on employees' ethnicity, race, and sex on the annual "Employer Information Report EEO-1" (EEO-1). The EEO-1 requirements apply to all employers with 100 or more employees and federal contractors with 50 or more employees.
In 2016, the Obama administration announced its intention to seek a three-year approval from the Office of Management and Budget (OMB) of a revised EEO-1. The revised EEO-1 would have two components. Component 1 would capture the same information that is currently reported by employers (i.e., data on employees' ethnicity, race, and sex, by job category). Component 2 would collect data on W-2 earnings and hours worked for all employees by race, ethnicity, and sex, in 12 specified pay bands for the 10 EEO-1 job categories. The revised EEO-1 was set to take effect in March 2018. In 2017, however, OMB stayed the implementation of Component 2. The Trump administration cited the "paperwork burden" on employers as a reason for the stay.
On March 4, 2019, Judge Tanya S. Chutkan of the US District Court for the District of Columbia held that the OMB's decision to stay the EEOC's pay data collection under Component 2 was "arbitrary and capricious." The court vacated the stay and ordered that the revised EEO-1 form, including Component 2, "shall be in effect." The decision came down just weeks before employers' May 31, 2019 deadline to submit EEO-1 reports for 2018. Both employers and the EEOC expressed uncertainty as to whether employers would be required to report 2018 pay data by the May 31 deadline. The EEOC even told the court that it lacked the infrastructure to receive and secure employers' pay data on such a short timeframe.
After weeks of speculation as to the effect of the court's order, on April 25, Judge Chutkan provided some clarity. Judge Chutkan ordered employers to submit their 2018 pay data by September 30, 2019. She also ordered the EEOC to take "all necessary steps" to meet the September 30 deadline and to provide regular compliance updates.
In addition, Judge Chutkan ordered the EEOC to collect a second year of pay data, allowing the agency to choose between 2017 or 2019. The EEOC must decide which second-year data it will collect by May 3, 2019. Judge Chutkan noted that collecting 2019 data would be less burdensome on employers, which may inform the EEOC's decision.
Notably, the initial approval of the revised EEO-1 is set to expire in September. It is unclear whether the OMB's 2017 stay tolled the expiration date, but Judge Chutkan has stated that she assumes it did. If the expiration date is tolled, employers can expect the revised EEO-1 to remain in effect for an additional year (at least).
Employers should be prepared to submit 2018 pay data to the EEOC by September 30. The EEOC will soon announce whether it will collect either 2017 or 2019 pay data, and employers should take steps to collect the relevant year's data. Because the revised EEO-1 may lead to increased scrutiny on potential pay disparities, employers should consult legal counsel to review pay data and practices. Please feel free to contact the attorneys listed on this Advisory for further guidance or analysis.
© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.