Attention Employers With 100 Or More Employees: Deadline Quickly Approaching to Submit Employee Pay Data to the EEOC

Employment and Labor Update

Attention Employers With 100 Or More Employees: Deadline Quickly Approaching to Submit Employee Pay Data to the EEOC

All private employers, including federal contractors, with 100 or more employees must submit a second component of their annual EEO-1 Report involving employee pay and “hours worked” data (referenced as “Component 2”) for calendar years 2017 and 2018 by September 30, 2019. The submission of employee pay data is a new requirement for covered employers, beginning this year.

What is an EEO-1 Report?

Each year, the Equal Employment Opportunity Commission (EEOC) collects a EEO-1 Report from certain employers and federal contractors under the authority of Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e, et seq. The EEO-1 Report collects workforce racial/ethnic and gender data by job category to further understand and address employment equality issues. Covered employers must submit this “Component 1” data by May 31 of each year. According to the EEOC, the data collected from employers is used for a variety of purposes, including enforcement, self-assessment by employers, and research.

Background on the new Component 2 requirement

In 2016, the EEOC proposed expanding the data collection by requiring pay and hours-worked data to be included on EEO-1 forms. Although the federal Office of Management and Budget (OMB) originally approved these additional reporting requirements in 2016, the OMB reversed course in 2017 and halted the new requirements from going into effect^#1.

Following the filing of a lawsuit by employee and minority-rights advocates against the OMB, a federal district court in Washington D.C. entered an order in April of 2019, which reinstated the Component 2 pay data reporting requirements for employers^#2. Despite the OMB’s recent appeal of the federal court’s order, covered employers are still required to file 2017 and 2018 Component 2 compensation data by September 30, 2019.

Which employers need to file Component 2 pay data?

Private employers, including federal contractors, who had 100 or more employees during the “workforce snapshot period” of October 1 to December 31, 2017 or the same October-December period in 2018 must file Component 2 data for 2017 and 2018, respectively^#3. The 100 employee-threshold is a combined total for the employer, including employees based at the company’s headquarters and all locations or establishments.

An employer doing business at only one establishment in one location is required to complete only one Component 2 report. An employer who does business at more than one establishment (i.e., multi-establishment employers) must complete multiple reports, as more fully detailed in the EEOC’s guidance materials noted below.

Which employees should be counted for the 100-employee threshold?

Employers must count all full-time and part-time employees working during the “workforce snapshot period”, which is any pay period selected by the employer between October 1 and December 31, 2017 for the 2017 report, and between October 1 and December 31, 2018 for the report 2018 report.

What data is required to be reported?

Employers must first select a pay period during the subject snapshot period for the pertinent reporting year. For all individuals employed during that period, employers must report (1) all employee counts by demographic information and job category as required by Component 1; (2) year-end earnings for each employee based upon Box 1 of the employee’s W-2 (i.e., wages, tips and other income); and (3) total hours worked by the employees from January 1 through December 31 for the reporting year^#4. The pay data is measured using 12 salary ranges (i.e., pay bands) across 10 different job categories (e.g. Executives, First/Mid-Level Officials and Managers, Professionals, Technicians, etc.).

The EEOC has published a sample form on its website to demonstrate how the Component 2 data is organized to collect compensation data. The hours worked and pay data is totaled at the bottom of the form. Below is a snapshot of the form listing only the first job category, for illustration purposes.

How do employers file the Component 2 data?

Employers are required to submit the Component 2 data electronically through the EEOC’s web-based portal, which opened on July 15, 2019. According to the EEOC’s guidance materials, employers must report data through the Component 2 EEO-1 online filing system, or by creating an electronically transmitted data file and inputting their data in the appropriate fields in accordance with the data file specifications. The EEOC recently updated its Component 2 filing site, which now provides additional resources for employers, including a sample form, instructions, and FAQs. The portal and guidance materials can be accessed at the following link: https://eeoccomp2.norc.org.

What are the penalties for non-compliance?

Any employer failing or refusing to file EEO-1 Reports when required to do so may be compelled to file by an order of a U.S. District Court, upon application of the EEOC^#5. Additionally, employers must be accurate and truthful in their reporting. The penalties for making willfully false statements on the report include fines or imprisonment of up to 5 years.^#6

Will the EEOC keep employer data confidential?

Title VII subjects the EEOC to strict confidentiality requirements, subjecting EEOC officers and employees to criminal penalties for disclosing employer data^#7. However, the EEO-1 reports may be disclosed once a discrimination claim under Title VII is initiated. The reports are also generally discoverable after a lawsuit is filed. Although some employers have used their EEO-1 Reports to defend against race or gender discrimination claims when the data is favorable to the employer, Plaintiffs and/or the EEOC may similarly use unfavorable data against employers in discrimination cases.

What can employers do now to prepare for the September 30 filing deadline?

• Review the EEOC’s sample form, instructions, and FAQs at the following links: https://eeoccomp2.norc.org/Info; https://eeoccomp2.norc.org/faq
• Set aside time and designate one or more company representatives to locate and gather the 2017 and 2018 employee pay and hours data well before September 30. This will likely be a time-consuming process.
• Due to the OMB’s pending appeal, it’s possible that a court may extend the September 30 deadline, or vacate the lower court’s order requiring the submission of Component 2 data. Accordingly, although employers should prepare now to timely file the Component 2 data, employers may wish to wait closer to the September 30 deadline to actually file the required data.
• Consider conducting an internal audit of company pay to address any pay disparities among the subject job and demographic categories. While the audit may not impact the 2017 and 2018 data reports, employers may use the impending deadline as an opportunity to review and improve their equal pay practices.