How Do the EEOC and OFCCP Use EEO-1 Reports?

 

Allen Smith, J.D. By Allen Smith, J.D. September 17, 2019
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​The Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP) require employers to file the EEO-1 report annually, with additional pay-data information due Sept. 30 this year. But what purpose does the EEO-1 serve? Here is an overview of how the agencies may use both of the report's components, 1 and 2.

Component 1 data of the EEO-1 report lists employees by job category, race, ethnicity and gender. Component 2, a part of the report that the EEOC says it plans to drop, asks for employees' hours worked and pay information from their W-2 forms, broken down into the same categories as the data in Component 1.

Businesses with at least 100 employees and federal contractors with at least 50 employees and a contract with the federal government of $50,000 or more must file Component 1 of the EEO-1 form. However, only employers with at least 100 employees, including federal contractors, must file Component 2.

How Might Component 2 Data Be Used?

"Some employers are concerned that by turning their pay data over to the EEOC, they will be subject to discrimination claims based on their pay structure," said Jay Patton, an attorney with Ogletree Deakins in Birmingham, Ala. "Some government contractors are also worried that the pay-data filings could be used by the OFCCP to bring compensation-based claims against the contractors."

However, Patton doesn't believe either will happen.

"It seems unlikely that this data will provide ammunition for a wide-scale attack on employers' pay practices," he said. That's because Component 2's pay bands are unlikely to reflect an employer's actual pay structure, since the bands required by Component 2 are broad, he said.

The EEOC said in its Sept. 11 announcement that it plans to sunset the Component 2 requirement because "the unproven utility to its enforcement program of the pay data as defined in … Component 2 is far outweighed by the burden imposed on employers that must comply with the reporting obligation."

Fatima Goss Graves, president and CEO of the National Women's Law Center (NWLC), stated, "The Trump administration made it clear … that, if it were not for NWLC winning its pay-data collection lawsuit, it would simply allow employers to continue to hide their wage gaps by gender, ethnicity and race. This is outrageous. … We won't allow it."

Closing discriminatory wage gaps would be easier if there were more information about pay disparities, categorized by sex, race and ethnicity, according to the NWLC. In its lawsuit, it persuaded a district court earlier this year to force the EEOC to require pay-data collection, despite the agency's arguing against this.

The U.S. District Court for the District of Columbia's decision in National Women's Law Center v. Office of Management and Budget rejected the Office of Management and Budget's conclusion that Component 2 "imposes unwarranted burdens, lacks utility and raises significant confidentiality concerns."

Business groups, including the Society for Human Resource Management, have challenged Component 2 in the litigation, a challenge that may have helped persuade the EEOC to drop Component 2 in the future.

While the EEOC initially thought it might use the proposed W-2 and hours-worked data to undertake early assessment of charges of discrimination, publish aggregate EEO-1 data and augment EEOC training, this was insufficient justification for the pay-data collection, the groups wrote in an Aug. 26 brief. The EEOC itself has stated that the agency "does not intend or expect that this data will identify specific, similarly situated comparators or that it will establish pay discrimination as a legal matter."

Employers nevertheless were concerned about Component 2, partly "given the uncertainty around how the data would be used, protected and potentially shared," said Laura Mitchell, an attorney with Jackson Lewis in Denver.

As for the OFCCP, the agency "does not appear to be overly interested in Component 2 information, as it secures more-detailed compensation data during its audits," Patton said.

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

What About Component 1 Data?

The purpose of Component 1 of the EEO-1 report isn't controversial, and the EEOC intends to keep requiring employers to file it. Component 1 contains only 180 data fields per employer location. Component 2 has 3,660 data fields for each site.

The EEOC uses Component 1 to produce aggregate-level statistics on job patterns for minorities and women in private industries across EEO categories, said Alissa Horvitz, an attorney with Roffman Horvitz in McLean, Va. The agency uses the data to analyze employment patterns to support civil enforcement actions. The EEOC also analyzes Component 1 data to identify employment patterns, such as the representation of women and minorities within companies, industries or regions.

The OFCCP uses Component 1 of the EEO-1 report for its audit process in multiple ways, said Erin Schilling, an attorney with Polsinelli in Kansas City, Mo. Through this part of the report, the agency can identify federal contractors and subcontractors that are in its jurisdiction and may be selected for audit.

In addition, last year, when the OFCCP disclosed its methodology for issuing audit-scheduling letters, it stated that it gave priority to contractors with more workers. The OFCCP presumably obtains employee counts from the contractor's last EEO-1 filing.

"EEO-1 reports are generally thought to be used against employers by the EEOC, the OFCCP or plaintiffs attempting to prove disparate impact and treatment," Schilling said. "However, employers can sometimes use EEO-1 reports to their advantage, defensively, to show nondiscrimination. For example, an EEO-1 report can show the makeup of an employer's workforce, which could contradict certain claims of discrimination."

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