Court Orders EEOC to Continue Collecting 2017 and 2018 Pay Data

 

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The Equal Employment Opportunity Commission (EEOC) must continue collecting EEO-1 Component 2 pay data—broken down by job category, race, sex and ethnicity—for 2017 and 2018 even though the deadline for employers to file the information has passed.

The EEOC "must continue to take all steps necessary" to complete the data collection by Jan. 31, 2020, according to an Oct. 29 order issued by Judge Tanya Chutkan of the U.S. District Court for the District of Columbia.

"The order does not create any new or additional pay-data reporting obligations," explained Laura Mitchell, an attorney with Jackson Lewis in Denver. So employers that already properly submitted their data don't need to take any additional steps.

Earlier this year, certain employers were required to submit EEO-1 Component 1 data that lists employees by job category, race, ethnicity and sex. Additionally, by Sept. 30, most employers with at least 100 employees were required to submit Component 2 pay data, which asks for employees' hours worked and pay information broken down into the same categories. However, a judge ordered the EEOC to continue collecting Component 2 reports until a certain percentage of covered employers submitted data.

Employers who have not yet filed their pay-data reports should finalize their Component 2 reports and file as soon as possible, said Cheryl Behymer, an attorney with Fisher Phillips in Columbia, S.C.

While there are no automatic fines or penalties for not filing, the reports are mandatory for employers who were covered by the requirements in 2017 and 2018, she noted. Employers who don't file reports may receive a "failure-to-file" letter from the EEOC and a notice from a federal court to explain why. 

"Failure to respond could result in the court finding the employer in contempt and issuing sanctions, including requiring the employer to file the missing reports," Behymer said. "Because the court has refused to allow the EEOC to close the filing portal as it requested, the agency may feel pressured to act aggressively if employers fail to file." 

Court Declines to Close Collection

In 2017, the federal government decided not to gather Component 2 information, and worker advocates sued to force the EEOC to collect it. After a heated legal battle, the EEOC announced that employers must report Component 2 data from 2017 and 2018 payrolls by Sept. 30.

The data collection "will not be deemed complete … until the percentage of EEO-1 reporters that have submitted their required EEO-1 Component 2 reports equals or exceeds the mean percentage of EEO-1 reporters that actually submitted EEO-1 reports in each of the past four reporting years," Chutkan had ruled on April 25.

Recently, however, the parties to the lawsuit disagreed on how to calculate the appropriate percentage. The federal government asked the court to deem collection complete after about 73 percent of covered employers submitted data—which represents the mean percentage of employers who submitted data by the deadline in prior years.

Worker-advocacy groups said collection should remain open until about 98 percent is collected—which is the mean percentage collected in prior years even after the due date.

Siding with the worker-advocacy groups, Chutkan said in her most recent order that the EEOC must calculate the mean percentage based on "reporters that actually submitted EEO-1 reports."

The court recognized the burden on the EEOC of collecting data from every reporter. "But at this stage, the EEOC has not even collected the average response rate it calculates for reporters who submitted data within the grace period (rather than at the deadline) in previous years," Chutkan said.

She also directed the government and advocacy groups to "provide a joint status report and proposed order on or before Feb. 7, 2020, regarding the completeness of the EEO-1 Component 2 data collections and a proposed schedule, if necessary, for moving forward."

Submitting the Data

For EEO-1 Component 2, employers must report wage information from Box 1 of the W-2 form and total hours worked for all employees by race, ethnicity and sex within 12 proposed pay bands.

Employers should select a pay period between Oct. 1 and Dec. 31 of the reporting year as the "workforce snapshot period," EEOC guidance said. Employers, including federal contractors, are required to submit Component 2 pay data if they had 100 or more employees during the workforce snapshot period.

[SHRM members-only HR Q&A: What are the filing requirements for the EEO-1 form?]

Remember that although the payroll period is a narrow time frame that establishes the employee head count, the W-2 Box 1 pay data and the hours worked are for the year, not just the payroll period, Behymer said. Also note that the EEOC has adopted the Fair Labor Standards Act practices for calculating compensable hours so that paid holidays, vacation and leave are not included. For exempt employees, businesses may report actual hours worked or designate 40 hours a week.

The EEOC has published very detailed specifications on how the data must be presented and how to verify the filings. Employers should visit the agency's website for a sample form, an instruction booklet and FAQs for covered employers.

After reviewing the online information, employers must decide if they're going to use the online filing system or the data upload option, which is especially useful for large, multi-establishment employers, Behymer noted. "We recommend the HR or compliance person responsible work closely with the employer's IT [information technology] team if they choose to file via the data upload method."

Future Reporting Years

The EEOC recently announced that it will not collect the pay data in the future. The agency concluded that the burden imposed on employers to gather the information outweighs the usefulness of the data for the agency.

The EEOC still plans to follow its longtime practice of collecting Component 1 data.

"Hopefully, we can revert to the normal EEO-1 filing process in 2020 and beyond," said Cara Yates Crotty, an attorney with Constangy Brooks, Smith & Prophete in Columbia, S.C.

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