All employers with 100 or more workers in the US have until September 30 to provide the EEOC with pay data as part of the annual workforce data report known as the EEO-1.
On April 25, US District Judge Tanya Chutkan accepted the EEOC’s proposal (more here) to make employers submit their 2018 pay data this fall. She also ordered the EEOC to collect a second year of pay data, giving it a choice between collecting employers’ 2017 data or making it collect 2019 data down the road. Her ruling is expected to impact more than 60,000 employers.
While the UK and other countries outside the US have made the disclosure of information related to company gender pay gaps publicly available, the data submitted to the EEOC will not be published. So while US employers do not have to fear public “naming and shaming” in the immediate term, the pay data (when combined with demographic information) will certainly bring any significant disparities to the EEOC’s attention.
Quick Background on the Revised Form
Recall that back in March, the Court lifted a stay that the Trump Administration’s Office of Management and Budget had placed on the implementation of the pay data collection portions of the revised EEO-1 Report (more here). The revised EEO-1 form requires employers with 100 or more employees in the US to report W-2 wage information and total hours worked (Component 2 Data) for all employees by race, ethnicity and sex within 12 EEOC created pay bands. While there are not monetary penalties or fines for failing to submit EEO-1 reports, other sanctions for failing to comply may include termination of federal contracts and debarment (preclusion from all federal contracts).
More on the Court’s Order
In addition to the September deadline, the Court also gave the agency until April 29 to put a statement on its website informing employers of her decision and until May 3 to decide which second-year data set to collect. The agency must also give the Court a compliance update on May 3 and provide further updates every 21 days after that and must take “all necessary steps” to meet the September 30 deadline.
In light of this deadline, covered employers should:
- Assemble a cross-functional team of stakeholders (e.g. HR, finance, communications and legal) to own the reporting obligation.
- Identify processes to locate and coordinate company payroll and demographic information (since many companies use separate systems to maintain demographic data versus comp data).
- Utilize the reporting requirement as an opportunity to review the data with counsel under privilege in advance prior to submitting it.
- Locate pay data for employees employed during the “Workforce Snapshot Period” – a pay period the employer chooses that falls between October 1 and December 31.
- For these employees, employers must identify the number of employees by race/ethnicity and sex within each of the ten EEO-1 job categories who fall within 12 defined pay bands.
- In addition, for each job category and pay band, the employer must report hours worked information for the applicable employees.
- Employers will determine each employee’s pay band based on W-2 Box 1 income. Earnings reported in Box 1 include base pay, overtime wages, shift differentials, commissions, bonuses, and fringe benefits.
Last, the EEOC has until early May to appeal the Judge’s ruling. While there’s a possibility that the September 30 deadline could be stayed again, it is unlikely. And regardless of any appeal, employers are still required to submit Component 1 data (basic employee counts by race/ethnicity and sex) by May 31 (more information here and EEOC Portal here).
Please reach out to your Baker McKenzie employment lawyer for assistance in preparing your revised EEO-1 report.