A new decision by the U.S. District Court for the District of Columbia has reinstated a requirement instituted by the EEOC in the last year of the Obama Administration for employers to report pay data. On July 14, 2016, the EEOC asked the Office of Management and Budget (OMB) for a three-year approval of a revised EEO-1 form that would add new equal employment opportunity information to what the EEOC already collected from employers.
For years the EEO-1 form has required employers with 100 or more employees (50 or more employees for government contractors) to report the number of individuals employed by job category, sex, race, and ethnicity. To improve enforcement of equal pay laws, the EEOC sought to add a requirement to report pay data as well. The proposal would require employers to report aggregate W-2 wage and hour data in 12 "pay bands" for the 10 job categories on the EEO-1 form, showing the number of employees in each band by ethnicity, race, and sex. Before any agency can impose new reporting requirements, the OMB has to review the proposal to determine whether it meets the purposes of the Paperwork Reduction Act, which requires the OMB to decide whether the collection of information is necessary for the proper performance of the agency's functions, including whether the information has practical utility. Though the OMB initially approved the EEOC's request, when the Trump administration assumed control, the OMB decided to reconsider the decision and eventually ruled that the revised collection of information lacked practical utility, was unnecessarily burdensome, and created privacy and confidentiality issues.
The National Women's Law Center sued the OMB in D.C. and prevailed in an opinion by Judge Tanya Chutkin. Granting summary judgment, Judge Chutkin considered whether the OMB could review its prior decision approving collection of the data, which may be done only when relevant circumstances have changed or the burden estimates initially provided by the agency were materially in error. The Judge decided that the OMB did not meet either test and that its decision was therefore arbitrary and capricious.
What does this mean for large employers? Under the time frame initially proposed by the EEOC, employers would have had 18 months to organize the required data for submission, as the first filing period was set for March 2018. With this ruling, employers will be required to report the information by May 31, 2019, less than three months after the decision. The EEOC made the new EEO-1 form available as of March 18, 2019.
It seems likely that the Trump administration will file an appeal and seek a stay. But unless and until there is an appeal, employers with more than 100 employees and government contractors with more than 50 employees are faced with a new reporting requirement that gives them little time to collect the data in the required format.
Stayed tuned, and we will advise you if the anticipated appeal occurs. In the meantime, look for the new EEO-1 form here on the EEOC website.
This update is prepared for the general information of our clients and friends. It should not be regarded as legal advice. If you have any questions regarding this update, or for more information about this topic, please contact an attorney in our Labor & Employment Practice Group, or the attorney with whom you normally consult.