Last Friday, May 3, the Federal Register published the EEOC’s notice for pay collection for the 2019 EEO-1 cycle. The surprising turn of events began when The National Women's Law Center and the Labor Council for Latin American Advancement challenged OMB’s decision to rescind the Obama Era change to the EEO-1 reporting to add pay reporting as unfair and poorly reasoned in November 2017. In March 2019 the judge granted summary judgement to the two groups requiring the EEO-1 pay tool be reinstated. The judge then held a hearing in early April to determine what data should be collected.
U.S. District Judge Tanya Chutkan ordered the EEOC to have employers submit their 2018 pay data by September 30, 2019. She then ordered the EEOC to collect a second year of pay data, either collecting employers' 2017 data or collecting 2019 data in 2020. She ordered that the collection of the pay data has to match the response rate of the EEO-1 demographic component averaged over the last four years (taking out employers with 99 or less employees as these employers are not required to report compensation information).
Business groups, including the U.S. Chamber of Commerce and Direct Employers, argued that they were taken by surprise by the reinstatement, saying member employers have not kept data in a form transmissible to the EEOC and would need at least 18 months to complete the survey. The Direct Employers survey revealed that less than 25% of survey participants could possibly complete the reporting requirement by September 30th.
On April 29th the EEOC placed a statement on its website informing employers of the decision and new requirement. Employers must decide by May 3rd whether they will collect 2017 data or 2019 data. The EEOC complied with that order. The EEOC argued that the utility of the data is suspect, and that it could not, with its current contractor, collect the data and maintain the security necessary as required by the National Academy of Science. The court ordered the collection to be performed regardless of the utility of the data and the EEOC has since subcontracted with the National Opinion Research Center (NORC) located at the University of Chicago to collect this data. The court also ordered continuous updates on the EEOC’s progress.
On May 3rd, the EEOC filed an appeal to the decision. The appeal was made to preserve issues from the trial court decision. It is unclear whether the EEOC will follow through on the appeal. There was a stay requested, and employers will have to file two years of pay data. The pay data reporting tool will open mid-July.
Also, on May 3rd, the EEOC filed an update as required by the Court. The update included:
- The notice of appeal filed has no effect on the Component 2 9/30 requirement
- A contract with NORC was entered into on 5/1/2019
- EEOC Chair Appointee Janet Dhillon’s nomination will be up for confirmation by the Senate the week of May 6th
The update also provided a summary of activities for the period of 5/4/2019-5/24/2019:
- EEOC is working with NORC to draft and modify contract (original contract was for one year data collection) to collect 2017 component 2 data;
- NORC will develop a Project Management Plan that will include detailed planning for executing the contract;
- NORC and EEOC plan to have bi-weekly meetings, the first of which will be in the next three weeks; and
- EEOC to oversee preparation and planning for NORC email and phone helpdesk to assist filings with the helpdesk to open in the next three weeks (likely after Memorial Day).
As for the EEO-1 Component 2 reporting form, Box 1 of the W-2 amount will be used as the base and employers will have to code it to 12 different band groups by EEO-1 Category. This requirement only applies to employers with 100 or more employees. The bands are as follows:
Pay Band 1 <$19,239
Pay Band 2 $19,240-$24,439
Pay Band 3 $24,240-$30,679
Pay Band 4 $30,680-$38,999
Pay Band 5 $39,000-$49,919
Pay Band 6 $49,920-$62,919
Pay Band 7 $62,920-80,079
Pay Band 8 $80,080-$101,919
Pay Band 9 $101,920-$128,959
Pay Band 10 $128,960-$163,799
Pay Band 11 $163,800-$207,999 and
Pay Band 12 >$208,000
Employers will also have to report on FLSA hours worked, not all hours for which an employee is paid like vacation, sick time, etc. For non-exempt workers, employers will report actual hours worked (including overtime hours). Employers for exempt employees will have the option to: 1) use proxy hours of 40 hours per week for full-time exempt employees and 20 hours per week for part-time exempt employees; or 2) provide actual hours if the employer tracks hours worked for exempt employees. The hours reporting requirement is a major issue for most employers.
There are also a number of issues that will have to be answered by the EEOC, such as:
- How to report mergers, acquisitions, and spinoffs
- Employees with compensation that may be out of ordinary such as deferred compensation and more.
The reporting form is expected to have a comment area that could be used to explain any discrepancy.
Further, there is an issue that this data may be discoverable either by litigation or through the Office of Federal Contractor Compliance Programs (OFCCP) in the U.S. Department of Labor through a Freedom of Information Act (FOIA) request, which is not allowed under law for the EEOC to provide. There is currently a case before the Supreme Court concerning the issue proprietary business information under FOIA that will set the standards for the confidential business exception under FOIA.
As for the current Demographic Reporting component of the EEO-1, the EEOC reported on its website that it will allow a onetime 14-day extension for the filing of that report.
Additional ASE Resources
Hot Button Briefing: On May 29th, ASE will host a webinar that will discuss all issues and how to report Component 2. More details will be forthcoming. Watch for an email or check our upcoming events web page.