EEO1 Component 2, Pay Data Analysis Becomes A Reality

McNees Wallace & Nurick LLC
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McNees Wallace & Nurick LLC

By now, you are no doubt aware that the long-debated pay data component (“Component 2”) to the EEO1 Report is a requirement for this year’s reporting.  The requirement first surfaced in 2016 but was the subject of repeated litigation that kept it from being implemented.  Now, the EEOC has stated that it will open a portal for reporting by July 15th, and employers will have until September 30, 2019, to file their EEO1 Report, including Component 2 data based on their employees’ 2018 W-2 wages.

The original reporting requirement mandated that all employers affecting interstate commerce with 100 or more employees report W-2 wages for employees by race and gender within specific pay bands.  While the EEOC has said that it will change the format for Component 2 Data, the agency has not yet explained what the format will be.  Guidance on formatting may be forthcoming within the next few weeks.

So what’s the purpose of all this data collection anyway? Once the data has been collected, it will be shipped off to the University of Chicago’s National Opinion’s Research Center (“NORC”) for review.  EEOC has sought to definitively demonstrate a statistically significant pay gap between men and women, and majority and minority employees, for decades.  This tool is another in the agency’s chest to attempt to show that difference.  Ultimately, EEOC could use this data to raise claims of pay discrimination based on gender and ethnicity.

So what should you do now?  First, be ready to file your report if you are required to do so.  In addition, you should consider an audit of your wage data now to get out in front of any issues that might surface.

Employers concerned about their own pay practices can undertake a wage analysis by race and gender.  This will give the employer insight into how its pay practices may be viewed based on the data submitted.  We do note that EEOC is unlikely to be able to take any action based on the data submitted in the near term.  There is little doubt about the agency’s long-term goals, however.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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