Tax season may be coming to an end, but if you are a private employer with 100 or more employees, you may not be emerging from your mountain of paperwork just yet. Private employers with 100 or more employees are now required to report to the U.S. Equal Employment Opportunity Commission ("EEOC") the annual wages earned and hours worked by employees of each gender, race and ethnic background in the new "Component 2" section of a revised EEO-1 form. While the existing EEO-1 form had long required employers to provide data on the gender, race, and ethnicity of their employees broken down into a number of specified job categories, "Component 2" now requires additional information regarding the aggregate wages and working hours of employees within those demographic categories.
This requirement was reinstated by the District of Columbia federal judge on March 4, 2019. The ruling overturned a 2017 postponement of the EEOC pay data requirement. In doing so, the federal judge rejected arguments by business and employer advocacy groups and the Office of Management and Budget ("OMB") that any benefit from providing the data was outweighed by the tremendous cost involved in collecting it.
Press Pause on Panic Mode: May 31 Filing Deadline is Unlikely to be Enforced as to Component 2
The federal court's decision means that the revised EEO-1 form is now in effect, permitting the EEOC to begin collecting pay data at once. Employers ordinarily are required to file EEO-1 reports by March 31, 2019 of every calendar year, but this year the deadline has been extended until May 31, 2019 because of the government shutdown. Whether employers must now scramble to compile the additional information required by Component 2 to meet the May 31 deadline remains uncertain.
While the Court did not say when the collection of pay data will go into effect, she did note that employers had ample notice of the requirement imposed by Component 2 during the two-year stay and should have reasonably anticipated that the revised EEO-1 form could be reinstated.
It is unlikely that employers will be required to submit the Component 2 information by that May 31 deadline. This deadline places a lot of pressure on the EEOC to provide the necessary guidance and forms for employers in an unrealistic timeframe. Oddly, the reporting period actually began about 10 days ago (March 18). May 31 marks the end of the reporting period, i.e., the filing deadline. To date, the EEOC has not released any instructions, guidelines, forms, or updated information regarding Component 2 reporting.
Additionally,it is likely that the OMB will appeal the decision and seek a stay of the court's order, which would delay the implementation of Component 2 again. Further, the OMB has strong arguments on its side. Despite the federal court's conclusion, providing this additional information is in fact time-consuming and expensive, as it would require employers to integrate their payroll databases with HR databases containing the required demographic data. Smaller employers, in particular, may lack the resources or technology for such integration. Lastly, Component 2 may not even accurately shed light on pay discrimination in the workplace because it would not incorporate other non-discriminatory factors like an employee's unique skills or experience.
Statement on the 2018 EEO-1 Portal Opening for Component 1 Data
On March 18th, the agency posted the following statement on its website:
"As it announced on February 1, the EEOC is opening its EEO-1 online portal to receive 2018 EEO-1 Component 1 data starting March 18, 2019, and ending May 31, 2019. Instructions for filing are available here: https://www.eeoc.gov/employers/eeo1survey/index.cfm.
The EEOC is working diligently on next steps in the wake of the court's order in National Women's Law Center, et al., v. Office of Management and Budget, et al., Civil Action No. 17-cv-2458 (TSC), which vacated the OMB stay on collection of Component 2 EEO-1 pay data. The EEOC will provide further information as soon as possible."
It is widely anticipated that the "further information" to be provided will be an extension of the deadline for Component 2 information. However, employers only need to endure a few more days of uncertainty because Judge Chutkan has ordered the government to advise employers by no later than April 3 as to whether and when they will be required to report pay data as part of this year's EEO-1 reporting cycle.
Better Safe Than Sorry: How Employers Should Prepare
Although there is a high likelihood of an extension, employers should begin to compile the information required by Component 2 (including any necessary integration of payroll and HR information systems), continue monitoring the situation, and expect that the EEOC will soon provide further guidance. Our firm will provide updates as they become available.
Philip L. Reznik
Katherine A. Hren
Richard S. Rosenberg