Judge Tanya Chutkan of the US District Court for the District of Columbia on April 25 ordered the Equal Employment Opportunity Commission (EEOC) to collect EEO-1 Component 2 pay data collection for fiscal years 2017 and 2018 by September 30, 2019. However, the judge gave EEOC the option to collect 2019 data instead of 2017 data during the spring 2020 collection period. The judge also ordered that the overall pay data collection requirement be extended until April 2021. (The requirement was scheduled to end on September 30, 2019, under the Paperwork Reduction Act.) We anticipate that the US Department of Justice (DOJ) will appeal the court’s order vacating the stay, but at this point, employers should prepare to submit their pay data to the EEOC by September 30, 2019. EEO-1 Component 1 demographic data is still due on May 31, 2019.
For over 50 years, the 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 revised EEO-1 form requires employers to report W-2 wage information and total hours worked for all employees by race, ethnicity, and sex, and within 12 pay bands.
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 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 EEOC until April 3, 2019, to lay out how the data will be collected, by what deadline, and how employers should prepare the data. Following EEOC’s submission and NWLC’s response, the court held a hearing on April 16.
In her April 25 Order, Judge Chutkan ordered EEOC to collect fiscal year 2018 pay data by September 30, 2019. She also ordered the agency to collect fiscal year 2017 or 2019 data, and to decide by May 3 which year’s data it will collect. If EEOC chooses to collect 2017 data, the data will also be due by September 30, 2019. If EEOC chooses to collect 2019 data, the data will be due in the spring of 2020.
Finally, the judge ordered that the overall pay data collection requirement be extended until April 5, 2021, since OMB had stayed the requirement for more than 18 months. The requirement was originally scheduled to expire on September 30, 2019, under the Paperwork Reduction Act.
The filing deadline for the fiscal year 2018 pay data collection is now officially September 30, 2019. (The filing deadline for the EEO-1 Component 1 demographic data remains May 31, 2019.) The judge has ordered EEOC to post on its website notification of the pay data filing deadline by April 29. Notably, however, she did not provide a deadline by which EEOC must provide guidance to employers regarding how to report the pay data. We anticipate that EEOC will post such guidance in the next month or two.
While awaiting guidance from EEOC, employers should start thinking about what processes they need to put in place in order to be ready to report the pay and hours data, as well as the implications of submitting such data. This includes conducting internal analyses, on a privileged basis, that assess what the data will show when the company has to submit the information in September.
We presume that DOJ will appeal the judge’s order and seek a stay of the order. If the appeals court stays the judge’s order and reinstates OMB’s original stay, then employers would not have to report the data until the appeal was resolved. There are no guarantees, however – either with respect to whether DOJ will file an appeal or whether the appeals 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:
Philadelphia
Michael S. Burkhardt
W. John Lee
Washington, DC
Sharon Perley Masling
Grace E. Speights