As March Madness winds down, many businesses are faced with another brand of madness due to EEO-1 reporting uncertainty. The confusion stems from questions about whether and when employers will need to include pay data in their EEO-1 Surveys. Unfortunately for employers, a recent court ruling and EEOC proposal will likely require them to add “Component 2” pay data to the reports, increasing the time it will take to meet reporting obligations.
What is EEO-1 reporting all about?
The Equal Employment Opportunity Commission (“EEOC”), which is a federal agency that administers and enforces workplace discrimination laws, collects data from certain businesses regarding the race, ethnicity, and gender of their employee population. Employers with at least 100 employees are required to submit an annual EEO-1 Survey that reports this workforce composition data to the EEOC. Federal contractors (including first tier subcontractors) with 50 employees and a contract, subcontract, or purchase order amounting to $50,000 or more, as well as certain financial institutions, are also required to file an EEO-1 Survey. Penalties for noncompliance can be severe, and false statements are punishable by fines or even imprisonment.
Inclusion of pay data (Component 2 data)
A few years ago, the EEOC announced that starting in March 2018 employers would have to include pay data information for the entire workforce in their EEO-1 reports. In addition to reporting the traditional information, employees would also be identified as appearing in one of 12 proposed pay bands, ranging from under $19,239 in the first band, to over $208,000 in the final band. The revised EEO-1 Survey also required employers to report the total number of hours worked for employees recorded in each pay band. This pay data is referred to as Component 2 data (traditional information about race, ethnicity, and gender is referred to as Component 1 data).
To the delight of many employers, in August 2017, President Trump’s Office of Management and Budget (“OMB”) stayed the new pay data reporting rule, citing concerns about employers being overburdened. Traditional EEO-1 reporting came and went in March 2018, with no obligation to include Component 2 data. Notably, this year’s EEO-1 reporting deadline was pushed back to May 31, 2019, following the recent government shutdown.
Cue the madness
In early March of this year, a federal district court judge put Component 2 reporting back in play. The judge ruled that OMB did not have sufficient grounds to halt the pay reporting requirement, and also stated that the revised EEO-1 form is back in effect. This means that employers will need to start including Component 2 data in the EEO-1 Survey. The big question is: When do employers begin reporting this additional information?
Last month, the EEOC reported it is working diligently on next steps in light of the court ruling, and will continue to update employers with more information as the agency figures out how to untangle this situation. Recently, the EEOC told the judge who issued the ruling that the agency plans to require that employers submit the pay data by September 30, 2019. However, worker advocates pushed back, demanding that the EEOC should be forced to require employers to provide Component 2 data by May 31 of this year. Unfortunately there are no clear answers at this point as this still needs to be sorted out by the court.
What next?
For now, employers subject to EEO-1 reporting requirements should monitor this situation closely. We will keep The Law @ Work subscribers posted on any developments. Also, this will be an important topic discussed during our employment law update at Skoler Abbott’s Labor and Employment Law Conference on May 21, 2019. Click here for more information on the event and to register.