Court rules that employers must report pay data to EEOC

March 10, 2019

Employment Law Alert

Author(s): Seth L. Neulight, Jessica Schachter Jewell

A federal judge ordered reinstatement of an EEOC rule requiring employers to report specific employee data in their Employer Information EEO-1 reports. This alert discusses what businesses need to know.

On March 4, 2019, a federal judge ordered the Trump administration to reinstate an Equal Employment Opportunity Commission (“EEOC”) rule, introduced and approved during the Obama administration, that will require larger employers to report to the EEOC summary pay information by job category along sex, race and ethnicity lines in their Employer Information EEO-1 report. This new information, known as “Component 2” of the EEO-1, will need to be included in addition to what covered employers must already provide in Component 1 of the report (i.e., data on the ethnicity, race and sex of workers by job category).[1]

This announcement may feel like déjà vu all over again because the EEOC first published its proposed rule more than three years ago in February 2016.[2] After it made revisions through the notice and comment period that followed, in September 2016, the Office of Management and Budget (“OMB”) approved the rule adding Component 2 to the form. At that time, the EEOC announced that beginning in March 2018, covered employers would be required to submit this new information. Many employers began preparing for the new reporting requirement; however, nearly one year after the OMB approved the rule (and before the 2018 reporting deadline), it did an about-face and stayed the revision to the EEO-1 in August 2017. At that time, the EEOC notified the public that covered employers need only report Component 1 information.

Following the OMB’s stay, workers’ groups sued the OMB, EEOC and several individuals within the Trump administration, challenging the OMB’s statutory authority to review and stay the collection of pay data as part of the EEO-1. Last week a federal district court judge in the District of Columbia ruled that the OMB lacked authority to stay the implementation of the revised EEO-1 and vacated it.

Now the rule is “back on,” but for several reasons, employers may want to wait for further guidance before diving in to prepare the required reporting data. First, the Trump administration has appeal rights that it might pursue. Second, the EEOC has not issued any additional employer guidance, and its website shows that its links for the new form, a Fact Sheet for Small Business and a question and answer document, remain inactive.[3] Although EEO-1 reports are normally due at the end of March, because of the partial government shutdown, all covered employers have a postponed deadline of May 31, 2019, to file their reports. The survey will officially open on March 18, 2019. Employers should be prepared to include the Component 2 information in their EEO-1 reports at that time, but should stay tuned for additional guidance from the EEOC, which we expect will be forthcoming before the survey opens later this month.

  1. Specifically, employers with 100 or more employees, including federal contractors, will need to report the total number of employees across 12 pay bands (used by the Bureau of Labor Statistics in the Occupation Employment Statistics survey) for each of the 10 EEO job categories Executive/Senior Level Officials and Managers, First/Mid-Level Officials and Managers, Professionals, Technicians, Sales Workers, Administrative Support Workers, Craft Workers, Operatives, Laborers and Helpers and Service Workers). Employers will need to use the income reported in Box 1 of employees’ W-2 forms. Covered employers also will need to report the total hours worked by all employees accounted for in each pay band. For exempt employees, employers can choose to report either the actual hours worked, or a proxy of 40 hours for full-time employees and 20 hours for part-time employees.
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  2. See our February 05, 2016 alert,“EEOC issues proposed rule to collect pay data from employers,” available here.
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The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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