Employers may be required to disclose aggregate pay data in their annual EEO-1 filings as early as May 31, 2019.
On March 4, 2019, a federal court in Washington D.C. lifted the Office of Management and Budget’s (OMB) stay of the revised EEO-1 form that requires companies to submit summary wage data by race/ethnicity and gender. While we expect there may be further challenges and/or delays to the implementation of the revised EEO-1 form, taking a conservative approach means that companies should plan as though they need to report pay data by the current May 31, 2019 deadline.
Background: How the Obama Administration Changed Disclosure Requirements
The EEO-1 is an annual federally mandated survey. It requires all private employers with 100 or more employees and federal contractors with 50 or more employees to report data on race/ethnicity and gender across 10 job categories in their annual EEO-1 filings.
In 2016, the Obama administration pushed to expand the reporting requirements to include wage information. “Collecting data is a critical step in delivering on the promise of equal pay,” said then Secretary of Labor Thomas E. Perez. “Better data will not only help enforcement agencies do their work, but it helps employers to evaluate their own pay practices to prevent pay discrimination in their workplaces.”
2016: Revised EEO-1 Form and Aggregate Pay Data
The EEOC thus revised the form to require employers to submit aggregate W-2 earnings and hours across 12 pay bands for each of the 10 job categories. OMB approved the revisions and the new requirements were scheduled to go into effect for the 2017 reporting cycle, with a March 31, 2018 filing deadline.
2017: New Administration, New Approach — Immediate Stay of Revised Form
After the 2016 election, the revised EEO-1 form found itself on the chopping block. In August 2017, OMB initiated a review and immediate stay of the pay data reporting requirements. Under the new administration, OMB shifted course and challenged the proposed methods of collecting pay data, expressing concern that the additional reporting requirements “lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.”
Various employee advocacy groups quickly opposed OMB’s actions, and in November 2017, the National Women’s Law Center and Labor Council for Latin American Advancement sought relief in federal court.
2019: Relief From Federal Court — The Stay is Lifted
On March 4, 2019, the U.S. District Court for the District of Columbia granted summary judgment to the employee groups and lifted the stay. Judge Tanya S. Chutkan ruled that the OMB violated the law when it halted the EEOC’s efforts to collect pay data by race and gender from large companies. Chutkan noted that OMB “totally lacked a reasoned explanation” for changing its position on the pay data reporting requirement and ordered the government to move forward with collecting the data.
Takeaways for Employers
Chutkan’s order will have a significant impact. The current EEO-1 Report filing deadline is May 31st. That deadline and the current sample form did not contemplate or include the revisions. While technically possible that employers may need to submit the revised form with wage data this May, we expect that there will be further delays. OMB will likely appeal the District Court’s decision and seek a delay of the revised EEO-1 form pending the appeal. Additionally, the EEOC may also delay the filing deadline to allow employers more time to comply with the pay data requirements.
In the meantime, the safest approach is to prepare to submit the required pay data by the May 31st deadline. Many companies will need to identify how to pull and coordinate payroll and demographic information. This may require advance planning as many companies use separate systems to maintain demographic data versus comp data.
This is an opportune time to partner with counsel to conduct a pay audit to practice running the data and to proactively identify potential areas of unexplained disparity, before submitting the pay data to the EEOC.
We are watching for updates from the EEOC and OMB, and will share news on the Employer Report. If you have questions on the pay data collection requirements or auditing pay practices, please contact your Baker McKenzie lawyer.