Judge Revives EEO-1 Pay-Data Reporting Requirement

Controversial provisions require covered employers to report W-2 wages by race, ethnicity and sex


[Update: The EEOC and Office of Management and Budget have until April 3 to tell employers if companies will have to report pay data in this year's EEO-1 reports, according to a March 19 court ruling.]

A federal judge has reinstated the revised EEO-1 form's pay-data reporting provisions, which were suspended in 2017 by President Donald Trump's administration. The controversial provisions require covered employers to report pay information by race, ethnicity and sex, but the mandate's effect date isn't clear.

Businesses with at least 100 employees, and federal contractors with at least 50 employees and a contract of $50,000 or more with the federal government must file the EEO-1 form, which identifies by job category, race, sex, and ethnicity the number of employees who work for the business.

This year's May 31 filing deadline is quickly approaching, and employers may have already gathered this information without collecting pay data. Employers need to be aware that the ruling could take immediate effect and require them to report data on W-2 wages and hours worked for all employees who were part of their 2018 workforce snapshot, said Arthur Tacchino, J.D., chief innovation officer at SyncStream Solutions, which provides workplace compliance solutions.

"They also need to understand that this requirement could be rendered moot if the ruling is stayed pending appeal, but this is not guaranteed to happen," he added. If employers are required to report the additional data for this year, he thinks the Equal Employment Opportunity Commission (EEOC) will likely push back the deadline to allow employers more time to collect the information.

"While we can expect an appeal, which could further stay the collection of pay data, we nonetheless recommend employers revisit the preparations made in 2017 to file the pay-data component of the revised EEO-1 report," said Matthew Camardella, an attorney with Jackson Lewis in Long Island, N.Y.

If there is no further legal action, Camardella said he expects that the filing deadline will be pushed out, or the federal government will accept reporting under the old model for 2018 data and make arrangements for the revised reporting for 2019 data.  "The first option seems more likely since the district court ordered the immediate reinstatement of … the revised EEO-1 report," he said.

Controversial Provisions

The EEOC uses information about the number of women and minorities companies employ to support civil rights enforcement and analyze employment patterns, according to the agency.

"Over the past few years, there has been an ongoing battle at the federal level to determine whether the EEO-1 would also be used as a pay-data reporting tool," noted Cheryl Pinarchick, an attorney with Fisher Phillips in Boston.

Employers who oppose the expanded data collection said the W-2 income data that would be collected doesn't provide adequate information about pay disparities. "W-2 gross income includes other nondiscriminatory variables that may impact pay, including shift differentials, bonuses, commissions and overtime compensation," said Society for Human Resource Management member Janese Murray at a hearing before the EEOC in 2016. "While this data may provide the agency a broader view of pay practices, collecting this data will not allow the EEOC to evaluate comparable compensation data points."

However, the National Women's Law Center and the Labor Council for Latin American Advancement, the advocacy groups that filed the lawsuit, each said the information would help them evaluate pay disparities and better serve their clients.

When the White House Office of Management and Budget (OMB) suspended in 2017 pay-collection provisions included in EEO-1 form revisions made under President Barack Obama, the government said the data would have limited utility, be overburdensome to collect and raise privacy concerns.

"OMB's stated reason when issuing the stay … conflicted with its prior findings that EEOC's data collection had practical utility … was designed to minimize the burden on reporting employers … and provided adequate privacy and confidentiality protections," wrote Judge Tanya S. Chutkan in the March 4 opinion lifting the stay. "OMB failed to explain these inconsistencies."

Agencies are allowed to change their policies, but they must "provide a reasoned explanation for the change," she said.

"Chutkan minces no words in saying that there are no reasons to delay the impact of her immediate lifting of the pay-data collection stay," said Jay Patton, an attorney with Ogletree Deakins in Birmingham, Ala. Her decision rejects the idea that EEO-1 filers would be surprised by the stay being lifted. Chutkan noted that the original data-collection requirement had been in place "for almost a year by the time it was stayed."

However, many employers have already collected their EEO-1 data and are either working on it internally or have submitted it to law firms or other third parties for submission, Patton said.

Be Prepared

Employers should review their internal reporting systems to ensure they can produce the pay data that they will be required to report, Camardella said.

But Patton said he would not recommend that employers actively begin collecting pay data until there's further clarification on the impact of the court's order. Importantly, businesses need to watch both what happens in the courts and what position the EEOC takes in response to this order, he said.

The case is National Women's Law Center v. Office of Management and Budget, D.D.C., No. 17-cv-2458 (March 4, 2019).



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