Employers are faced with the prospect of having to put in considerably more work on EEO-1 reports this year, now that a federal judge has ruled the Office of Management and Budget (OMB) was wrong to stop implementation of a pay data requirement proposed during the Obama administration.
The EEO-1 survey requires employers to categorize employees by race/ethnicity, gender, and job category. Adding pay and hours-worked data to the annual report was proposed during the Obama administration to help the Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) identify pay disparities across industries and occupations.
So far, employers have not had to supply the pay and hours-worked data because the OMB issued a stay on the new requirements before they were implemented, claiming the rules were too burdensome on employers. But Judge Tanya S. Chutkan of the U.S. District Court for the District of Columbia on March 4 ordered the OMB to lift its stay, calling it “arbitrary and capricious.”
Employers Need to Be Ready
The OMB may appeal and seek a stay from the district court’s order to immediately comply with the new reporting requirement, H. Juanita Beecher, an attorney with Fortney & Scott, LLC in Washington, D.C., says, but “employers should determine immediately what it would take to comply with the pay report in case the administration decides not to appeal.”
If there is no appeal, employers may have a tough task ahead if they have to collect the pay data in time to make the May 31 EEO-1 deadline. “I expect that it will be very difficult for employers to provide the data because they were going to have 15 months to get ready prior to the Trump administration’s suspension of the pay report, and now they are going to have less than 90 days to prepare,” adds Beecher, coeditor of Federal Employment Law Insider.
Another possibility is that the Senate may finally confirm the nomination of Janet Dhillon to be the new chair of the EEOC, Beecher says. President Donald Trump renominated Dhillon for the post in January after her original nomination failed to result in confirmation. If she is confirmed, she will become the second Republican on the EEOC, which could allow it to vote to reverse the decision to require the pay report.
Currently, the EEOC has just two members—Republican and Acting Chair Victoria A. Lipnic and Democrat Charlotte A. Burrows—and three vacant seats. Without a quorum, the panel can’t vote on the pay report.
‘Still More Questions than Answers’
Charles McClellan, an attorney with Foulston Siefkin LLP in Wichita, Kansas, also expects an appeal of the judge’s order, but that doesn’t necessarily mean the ruling will be stayed while the appeal is decided.
With the May 31 filing deadline approaching, “there are still more questions than answers,” McClellan says. “The EEOC previously removed its guidance and instructions regarding pay data collection from its website, leaving willing contractors partially in the dark as to how pay data should be reported,” he says. “Even assuming contractors could collect the data in time, it seems unlikely that the EEOC even would be prepared by March 18, when this year’s reporting window is scheduled to open, to accept EEO-1 reports that include pay data.”
McClellan is advising employers to start collecting and reviewing their pay data as if reporting will be required during this cycle. “It likely will take a significant investment of time for employers to collect, validate, and summarize pay data in the format the EEOC has requested, particularly for large employers,” he says.
“If pay data reporting is required during this cycle, it seems likely that the EEOC would extend the filing window beyond May 31, 2019—both to update its own processes and to allow employers more time to comply—but, at this point, employers should not assume that an extension will be given,” McClellan says.
About the EEO-1
Employers with at least 100 employees as well as federal contractors and subcontractors with at least 50 employees are required to file the EEO-1 report every year so that authorities can gauge compliance with federal equal opportunity laws. In the past, reports were due in the fall, but the deadline was moved to March 31 in 2018 to allow employers time to comply with the new pay-data requirement. This year, though, the deadline was extended to May 31 because of the 35-day partial government shutdown that began on December 22, 2018.
Tammy Binford writes and edits news alerts and newsletter articles on labor and employment law topics for BLR web and print publications.