September 30, 2019 marks the newly announced deadline for employers who submit annual EEO-1 reports to report employee 2018 pay data to the Equal Employment Opportunity Commission (EEOC). The EEOC revealed the new deadline in a federal court submission last week. UPDATE: Since the original blog on this topic was published, the court issued an order confirming the September 30, 2019 deadline, and requiring the EEOC to collect a second year of data in addition to the 2018 pay information. The EEOC has also since announced its decision to collect 2017 pay data which will also be due this September. Employers (government contractors and commercial businesses) should work with an experienced labor and employment attorney to ensure they comply before the September 30, 2019 deadline.
Employers with 100 or more employees and federal contractors with 50 or more employees (and a contract or subcontract of $50,000 or more) have long been required to submit employment demographic data by race/ethnicity, gender, and job categories. Importantly, the new pay data reporting requirements apply only to businesses with 100 or more employees, regardless of government contractor status.
In September 2016, the Office of Management and Budget (OMB) approved revisions to the EEO-1 filings, including a new requirement to submit compensation and hours worked data. Implementation of this so-called “Component 2” was stayed, however, in August 2017, following a Trump administration OMB decision that the revisions were overly burdensome and posed privacy concerns.
OMB’s decision was recently overturned in a March 2019 court determination, which required employers to report the Component 2 data. However, the date that the EEOC would require that such data be submitted was unknown until the EEOC submitted its feedback in reaction to the court’s ruling.
The collection of Component 2 compensation and hours worked data will be a significant endeavor for employers and for the EEOC. Pay data for the year must be broken into 12 pay bands for each EEO job category by race/ethnicity and gender. An employee’s pay band is determined by the income listed in box 1 of the employee’s W-2 form. Regarding hours worked, employers will be required to report the total hours worked by all the employees accounted for in each pay band. For full-time, exempt employees, employers are permitted to report 40 hours per week for a full-time employee (or 20 hours for part-time employees).
According to the EEOC’s statement, due to the sheer volume of the data that is included in Component 2 collection, the EEOC will need to outsource the collection of the data to a contractor. Whereas the previous demographic collection only required 140 data fields, the Component 2 data will include 3,360 data fields of pay data. Importantly, the Component 2 deadline does not effect an employer’s obligation to file EEO-1 demographic data, which was due by May 31, 2019.
Employers should immediately begin examining the data they will need to submit and comparing it against employees in protected classes to ensure there are no disparate impact concerns. UPDATE: On July 15, 2019, the Component 2 electronic filing system went live, meaning that companies can now submit data to the system. FAQs, sample forms, and upload file specifications are available online here.
Sarah Nash, the author of this Client Alert, is an Associate in the following practice groups: Labor & Employment, Litigation, Intellectual Property & Technology Rights, Audits & Investigations, and Native American Law.