Each year, U.S. employers who have at least 100 employees or are a government contractor with 50+ employees and at least $50,000 in government contracts must file an EEO-1 form with the Equal Employment Opportunity Commission ("EEOC"). The EEO-1 traditionally included information about the race, ethnicity and gender of an employer's workforce within 10 specific federally defined job categories ("Component 1 Data").
In February 2016, the EEOC expanded the scope of the EEO-1 Reports that are submitted by employers to require information about employees' W-2 earnings and hours worked within 12 pay bands ("Component 2 Data"). The purpose of seeking this data was to allow the EEOC to run statistical tests on it to investigate allegations of discrimination. Not surprisingly, employers were opposed to and contested these expanded EEO-1 requirements. In August 2017, the newly elected Trump administration stayed implementation of Component 2 data, which left many to believe the issue was dead in the water.
However, that has proven not to be the case. Two organizations that opposed the stay (the National Women's Law Center and the Labor Council for Latin American Advancement) filed suit in federal court seeking to overturn it. On March 3, 2019, Judge Chutkan, District Judge for the United States District Court for the District of Columbia, granted their request and lifted the stay.
Following the issuance of her ruling, the EEOC requested the deadline to submit Component 2 data be extended until September 30, 2019. On April 25, 2019, Judge Chutkan granted that request, but also held that employers must submit Component 2 data for the 2017 and 2018 calendar years. Although a Notice of Appeal has been filed, it will not affect the deadline for filing Component 2 Data.
To assist employers in complying with the Court's ruling, the EEOC plans to set up a web-based portal for the collection of 2017 and 2018 pay data. Although it is not yet operational (it is expected to go live in mid-July 2019), the portal can be found here. Beginning on approximately June 17, 2019 (i.e., next week), a help desk should be up and running to answer questions. The contact information for the help desk will be: EEOCcompdata@norc.org; (877) 324-6214.
What to do?
If you have not already, take a look at the EEO-1 Form that the EEOC proposed in 2016 when the Component 2 data was first adopted as it will help you understand the data you will need to provide. If you do not have that form, contact the undersigned.
Next, identify a "workforce snapshot period," which is a pay period of your choice between October 1 and December 31 in the reporting year. You will need to report annual pay data for all employees who were employed in the period you select. For those employees you will need to provide information about the race/ethnicity, sex, job classification, hours worked and the pay band for each employee. The pay band will be determined based on the employee's W-2 Box 1 Income.
For non-exempt employees, you will report the total hours worked for the applicable reporting year. If you have actual hours worked for exempt employees, you can use that data. Otherwise, you will determine hours worked by using a 40-hour workweek for full-time exempt employees and a 20-hour workweek for part-time exempt employees.
Obviously compilation of this data is more complex than was required to provide Component 1 data. Your counsel can assist you to not only compile this data, but to analyze it to determine whether any pay disparities exist in your workforce. Since the EEOC indicated it wanted to use this data to determine whether discrimination exists, we can presume the EEOC likely will be active in this area. Thus, the best practice is to be proactive. Get out in front of any issues before the EEOC knocks on your door.