The National Women’s Law Center and the Labor Council for Latin American Advancement objected to the Equal Employment Opportunity Commission’s (EEOC’s) April 3 proposal to extend the filing deadline for its EEO-1 Component 2 pay data collection. EEOC had proposed an extension of the deadline from May 31, 2019, to September 30, 2019, after the district court ordered reinstatement of the pay data collection requirement. While the court may approve the extension, employers should not assume the deadline for the EEOC pay data collection has been extended unless the court issues an official order. We anticipate a ruling by the court in the near future. The deadline for Component 1 of the EEO-1 report remains May 31, 2019.
For over 50 years, EEOC has required employers with more than 100 employees (or federal contractors with more than 50 employees and contracts exceeding $50,000) to report the number of their employees by race, gender, ethnicity, and job category, through its Employer Information Report, more commonly known as the EEO-1. In February 2016, EEOC published a notice in the Federal Register announcing its intention to revise the EEO-1 data collection and begin collecting pay data as well. The Office of Management and Budget (OMB) approved the pay data collection in September 2016; the collection of pay data was to begin in 2017; and the first pay data reports (for 2017) were due in March 2018.
In August 2017, however, OMB reversed course and told EEOC it had decided to initiate a review and stay of the pay data collection. OMB’s memo stated that “[a]mong other things, OMB is concerned that some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.”
The National Women’s Law Center (NWLC) and other pay equity advocates filed suit in November 2017 and asked the US District Court for the District of Columbia to vacate the stay and reinstate the pay data collection requirements. To the surprise of many, Judge Tanya Chutkan ruled that OMB provided inadequate reasoning to support its decision to stay the collection. As a result, the court vacated the stay, thus reinstating the pay data collection requirement.
On March 18, EEOC released its general EEO-1 form and announced that in light of the partial government shutdown, completed forms would not be due until May 31, 2019. As for the pay data collection, EEOC simply announced “[t]he EEOC is working diligently on next steps in the wake of the court's order . . . which vacated the OMB stay on collection of Component 2 EEO-1 pay data. The EEOC will provide further information as soon as possible.”
NWLC then moved for a status conference. At the conference, the court said it would set a deadline for EEOC to begin collecting the data but then gave the commission until April 3, 2019, to lay out how the data will be collected, by what deadline, and how employers should prepare the data.
In its submission, EEOC informed the court that it would be able to undertake and close the collection of 2018 EE0-1 reports with the compensation data by September 30, 2019. EEOC explained that its current data processes are not capable of collecting employers’ 2018 pay data, and that modifying its current processes would take nine months and thus is not a viable option for collecting the pay data. Instead, EEOC has determined that the only way it can collect the data is by retaining a data and analytics contractor, which will cost more than $3 million. Moreover, in an affidavit, the head of EEOC’s Office of Enterprise and Data Analytics (OEDA) warned “there is a serious risk the expedited data collection may yield poor quality data because of the limited quality control and quality assurance measures that would be implemented due to the expedited timeline.” A number of business associations also filed an amicus brief with the court, arguing that employers are not currently prepared to comply with the Component 2 pay data collection.
NWLC filed a response to EEOC’s submission that strenuously objected to the proposed extension. It argued that the statements in the OEDA director’s affidavit are unsubstantiated and do not warrant any delay, and it asked the court to require EEOC to open the Component 2 collection so that employers can submit EEO-1 Component 1 and 2 data simultaneously by the May 31 deadline. NWLC asked the court to require EEOC to show cause by April 19 if EEOC cannot open the pay data collection in time.
In addition, under an equitable tolling theory, NWLC asked the court to require extension of the pay data collection requirement generally, since the requirement is currently scheduled to end, under the Paperwork Reduction Act, on September 30, 2019.
Currently, the filing deadline for the pay data collection is May 31, 2019. Given the current state of EEOC’s data systems, the judge is likely to approve EEOC’s proposed new filing deadline, although there is no guarantee that she will do so. As a result, we believe the prudent course of action is for employers to monitor the issue and at least start thinking about how they will report the data and the implications of submitting such data. This includes conducting internal analyses, on a privileged basis, that assess what the data would show if the company has to submit an EEO-1 report that includes the pay data.
We also presume that the US Department of Justice (DOJ) will appeal the judge’s order and seek a stay. If the appeals court grants the stay and reinstates OMB’s original stay, then employers would not have to report the data until the appeal was resolved. But again, there are no guarantees – either with respect to whether the DOJ will appeal or whether the circuit court will grant a stay.
In the long term, we expect that pay equity issues will continue to be a focal point. The House recently passed the Paycheck Fairness Act, and numerous states have enacted equal pay and salary history laws. EEOC has included pay equity as a strategic enforcement priority since 2013. Employers should consider conducting pay equity analyses under privilege to identify the nondiscriminatory factors that may explain pay differences, and make any desired pay adjustments. Furthermore, because some pay differences may be the result of differences in representation based on the job type or level of the position, employers should ensure that they are tracking applicant data on interest and availability for positions.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Blair J. Robinson