New Requirement Regarding Annual EEO-1 Reports.
(This affects employers with over 100 employees or over 50 employees with federal contracts / subcontract.)
Employers finally have an answer to when they must comply with a new requirement regarding their annual EEO-1 reports.
In an April 25 ruling, the U.S. District Court for the District of Columbia said the Equal Employment Opportunity Commission (EEOC) has until September 30 to collect 2018 compensation and hours-worked data—what’s being called Component 2—as part of employers’ EEO-1 reports. Employers with at least 100 employees are required to submit the data.
The court ruling requires the EEOC to collect 2 years of Component 2 data. One of the years will be 2018, but the court gave the agency a choice of whether to collect 2017 or 2019 data for the second year of required data.
The deadline for employers to submit Component 1 data—the race/ethnicity, gender, and job category information that has always been required in EEO-1 reports—is May 31.
The purpose of EEO-1 reports is to help the EEOC gauge compliance with federal equal opportunity laws. The Obama administration added the new Component 2 requirement as a way to identify pay disparities across industries and occupations.
Before the new requirement went into effect, however, the Trump administration issued a stay, claiming the new requirements were too burdensome. That stay was lifted by Judge Tanya S. Chutkan of the federal district court on March 4, and the EEOC responded that it would not be able to meet the May 31 EEO-1 deadline. The agency said it would need until September 30 to collect the newly required pay and hours-worked data.
Several employer groups had asked the court to postpone the new Component 2 requirement until 2020. Fortney & Scott, LLC, in Washington, D.C., which represented one of those groups, posted the following deadlines on its website:
- April 29—The EEOC will announce on its website that employers must get ready to file their Component 2 data for 2018 by September 30.
- May 3—The EEOC will inform the court which second year of data will be collected, either 2017 or 2019.
- September 30—Employers should have their 2018 Component 2 data submitted. Also, if the EEOC decides the second year’s collection will be for 2017, that year’s data also must be submitted by September 30.
- March 31, 2020—If the EEOC decides the second year of data will be for 2019, it must be filed by this date.
- April 5, 2021—The court has extended the authorization to collect Component 2 data to this date.
The ruling also requires the EEOC to provide the court with status updates every 20 days. Also, the court said a shortfall in the expected participation rate by employers in providing the compensation data means the EEOC will have to extend the filing period until the historical reporting percentages are achieved.
David Fortney, a cofounder of Fortney & Scott and an editor of Federal Employment Law Insider, says the EEOC claims it will need to use an outside contractor, and it will cost at least $3 million to implement a system to collect the Component 2 data. That money isn’t in the agency’s budget, so it likely will come from program and personnel cuts.
In addition, Fortney says there are concerns the current timeline won’t allow for a pilot program to test the system and won’t ensure there will be adequate security for the data. Also, the timeline won’t ensure the agency will have the methods and means to analyze the data.
Concerns for Employers
The reason for adding Component 2 data to the EEO-1 requirements is rooted in concerns over pay equity that go beyond EEO-1 reporting requirements. Mickey Silberman, an attorney with Fortney & Scott, points to laws in several states designed to improve pay equity. “The impetus for the pay data addition is really fixated on pay equity issues,” he says.
Silberman also said employers need to immediately start gathering the required data, and that won’t be easy since employers usually have pay data in a payroll system, hours-worked data in an attendance system, and the traditional race, ethnicity, gender, and job category data in a different HR system.
“The logistics of gathering this data and confirming its accuracy in a timely manner will be a problem for employers,” Silberman says.
The new data requirement also poses risks for employers since the EEOC and the Office of Federal Contract Compliance Programs (OFCCP) share EEO-1 data, and the OFCCP uses the data to initiate audits.