The Equal Employment Opportunity Commission (EEOC) has announced that employers must report pay data, broken down by race, sex and ethnicity, from 2017 and 2018 payrolls. The pay data reports are due Sept. 30.
Employers had been waiting to learn what pay data they would need to file—if any at all—as litigation on the matter ensued. A federal judge initially ordered the EEOC to collect employee pay data for 2018. The National Women’s Law Center (NWLC) and other plaintiffs wanted the EEOC to collect two years of data, as the agency was supposed to under a new regulation before the government halted the collection in 2017.
Judge Tanya Chutkan of the U.S. District Court for the District of Columbia sided with the plaintiffs and gave the EEOC the option of collecting 2017 pay data along with the 2018 information by the Sept. 30 deadline or collecting 2019 pay data during the 2020 reporting period. The EEOC opted to collect the 2017 data.
The agency said it could make the collection portal available to employers by mid-July and would provide information and training to employers prior to that date.
“We are awaiting confirmation from the EEOC or the contractor it is hiring to facilitate the pay-data collection on how to lay out the data file for a batch upload,” said Alissa Horvitz, an attorney with Roffman Horvitz in McLean, Va.
But employers should take some steps immediately. “Given that this is the first time this data is being compiled and many [human resource information systems] may not easily produce such a report, I recommend employers get started now,” said Koray Bulut, an attorney with Goodwin in San Francisco.
Employers should reach out to their subject-matter and technical experts and pull together resources to ensure that the required data components can be captured, analyzed and reported by Sept. 30, said Annette Tyman, an attorney with Seyfarth Shaw in Chicago.
Filing the additional reports will impose unanticipated burdens for HR, IT and legal departments, as well as third-party consultants, she noted. “It is unclear whether any further litigation options will impact the Sept. 30 deadline, and we are instructing employers to assume they must comply.”
Employers should keep in mind that they still must submit their 2018 data for Component 1 of the EEO-1 form by May 31, unless they request an extension. Note that the EEOC recently shortened the extension period for employers to report Component 1 data from 30 days to two weeks. So the extension deadline is now June 14.
Component 1 asks for the number of employees who work for the business by job category, race, ethnicity and sex. Component 2 data—which includes hours worked and pay information from employees’ W-2 forms by race, ethnicity and sex—is the subject of the legal dispute.
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Businesses with at least 100 employees and federal contractors with at least 50 employees and a contract with the federal government of $50,000 or more must file the EEO-1 form. The EEOC uses information about the number of women and minorities companies employ to support civil rights enforcement and analyze employment patterns, according to the agency.
The revised EEO-1 form will require employers to report wage information from Box 1 of the W-2 form and total hours worked for all employees by race, ethnicity and sex within 12 proposed pay bands.
[SHRM members-only HR Q&A: What are the filing requirements for the EEO-1 form?]
The reported hours worked should show actual hours worked by nonexempt employees and an estimated 20 hours per week for part-time exempt employees and 40 hours per week for full-time exempt employees.
“Filling out the added data in the EEO-1 form will present a large amount of work, especially as there’s great potential for human error when populating the significantly expanded form,” said Arthur Tacchino, J.D., chief innovation officer at SyncStream Solutions, which provides workplace compliance solutions.
For many employers, the Component 2 data may be in the custody of-party vendors that handle payroll and timekeeping, Bulut noted.
Employers should conduct an initial assessment of their systems, said Camille Olson, an attorney with Seyfarth Shaw in Chicago. Identify the systems that house the relevant demographic, pay and hours-worked data and determine how to pull the information together, she said.
Pulling EEO-1 data is much simpler for Component 1, she noted, because it only involves reporting the employer’s headcount by race ethnicity and sex—whereas collecting pay information involves more data points. Additionally, employers may use different vendor systems at different locations, some employees may have only worked for part of the year, and other employees may have been reclassified to exempt or nonexempt.
“Employers may want to inquire with their current vendors—payroll or otherwise—or look for outside vendors that may be able to assist them with this reporting requirement,” Tacchino said.
Under some circumstances, employers may be able to seek an exemption (at the EEOC’s discretion) if filing the information would cause an undue burden. “Mega employers” may not be able to show an undue burden, but this could be an option for smaller businesses, said Jim Paretti, an attorney with Littler in Washington, D.C. But that will depend on how the parties decide to move forward.
This is an excellent time for employers to work with legal counsel on a pay equity analysis, Bulut said. “This will allow employers to evaluate whether any wage differences are explainable by legitimate, nondiscriminatory reasons and make any appropriate adjustments to employee pay before the report is due.”
The Court Battle
The EEO-1 form was revised during President Barack Obama’s administration to add the Component 2 data, but the pay-data provisions were suspended in 2017 by President Donald Trump’s administration. The NWLC challenged the Trump administration’s hold on the pay-data collection provisions, and on March 4, Chutkan lifted the stay—meaning the federal government needed to start collecting the information.
On March 18, however, the EEOC opened the portal for employers to submit EEO-1 reports without including the pay-data questions. Chutkan subsequently told the government to come up with a plan.
The EEOC proposed the Sept. 30 deadline for employers to submit Component 2 data, claiming that the agency needed more time to address the associated collection challenges. Furthermore, the EEOC’s chief data officer warned that rushing the data collection may yield poor quality data. Even with the additional time, the agency said it would need to spend more than $3 million to hire a contractor to provide the appropriate procedures and systems.
Robin Thurston, an attorney with Democracy Forward and counsel for the plaintiffs, said at an April 16 hearing that the plaintiffs don’t want the agency to compromise quality. But they also wanted “sufficient assurances” that the EEOC will collect the data by Sept. 30.
On April 25, Chutkan ordered the government to provide the court and the plaintiffs with periodic updates on the EEOC’s progress and to continue collection efforts until a certain threshold of employer responses has been received.