When the EEOC adopted far more expansive – and intrusive – EEO-1 reporting obligations in 2016, the reaction from employers was one of concern. That concern was seemingly allayed when the Trump Administration put a halt to the new regulations in 2017. Unfortunately, as it turns out, the relief was short-lived, because the expanded EEO-1 reporting was reinstituted by a federal judge on March 4, 2019. The EEOC has since proposed a deadline of September 30, 2019 for employers to comply with the revived reporting requirement, potentially leaving employers with very little time to comply with their expanded EEO-1 obligations.
Background
For more than 50 years, the EEOC annual Employer Information Report (“EEO-1 Report”) has required employers to disclose the same basic workforce information: the number of individuals employed by the employer, organized by job category, race, ethnicity and sex. This information has been referred to as “Component 1” data.
In February 2016, the EEOC announced that it would be requiring far more information from employers in future EEO-1 reports. The new information, called “Component 2” data, would include employees’ W-2 earnings as well as hours worked in 12 pay bands. This expansion of reportable data was highly contested by employers. Employers complained about the significant burden to be sustained in compiling the Component 2 data as well as the likelihood of increased scrutiny of their pay practices and enforcement activity by the EEOC. On the latter point, the EEOC advised that it planned to run “statistical tests” on the Component 2 data as a means “to evaluate whether and how to investigate … allegations of discrimination.” Despite these complaints, the Office of Management and Budget (“OMB”) under President Obama approved the EEOC’s proposed changes on September 29, 2016. The changes were scheduled to go into effect in March 2018.
Before implementation, however, employers were afforded a reprieve by the Trump Administration. In August 2017, as part of its broader regulatory review, the Trump OMB placed a stay on the addition of the Component 2 data to the EEO-1 report. Many employers assumed that this spelled the end of the expanded EEO-1, and that is indeed where the matter stood for more than 18 months.
Return of Component 2
Two organizations that took issue with the Trump Administration’s stay of the new EEO-1 report were the National Women’s Law Center (“NWLC”) and Labor Council for Latin American Advancement (“LCLAA”). Both organizations filed suit in federal court seeking to overturn the stay, and Judge Tanya S. Chutkan granted their request on March 4, 2019 in National Women's Law Center, et al. v. Office of Management and Budget, et al., Civil Action No. 17-cv-2458-TSC (D. D.C.). Judge Chutkan’s order vacated the stay and effectively reinstated the OMB’s prior approval of the expanded EEO-1 report including the Component 2 data. The order declared that the revised EEO-1 report “shall be in effect.”
The effect of that order in practical terms was – and remains – unclear. The next EEO-1 reporting deadline following issuance of the court’s order is May 31, 2019. As a practical matter, it seemed unlikely that employers could realistically be able to submit the Component 2 pay data by that deadline, or that the EEOC would be able to receive and process such data. Thus, the EEOC advised the court that it sought to require employers “to collect retroactively 2018 Component 2 pay data and submit the relevant data to the EEOC by September 30, 2019.”
In response, however, the NWLC and LCLAA asked the court to reject the EEOC’s proposed September 30, 2019 deadline. Both organizations argued that the EEOC should be ordered to develop a plan to open the collection of Component 2 pay data in advance of the May 31, 2019 deadline, and to develop a plan for retroactive collection of 2017 pay data, which would have been collected last year but for the OMB’s stay.
How Judge Chutkan will resolve this issue remains to be seen, but there is no question that the impact on employers will be significant. Component 1 of the EEO-1 report requires employers to enter data into 140 fields, whereas Component 2 of the EEO-1 report will require employers to enter data into 3,360 fields. Apart from the burden of preparing the report is the concern about heightened EEOC investigatory and enforcement activity using all of the new, detailed pay data. While we wait for Judge Chutkan’s decision as well as any potential appeals, employers would be well served to begin planning for reporting 2018 Component 2 data now. Any questions regarding the new submission – and there are sure to be many – should be discussed with counsel.
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