Employers may need to begin collecting pay and hours data to report on EEO-1 forms, now that a federal district judge revived the controversial requirement put in place during the Obama administration. During that administration, the EEO-1 form was revised to require employers with 100 or more employees to report earnings and hours worked within 12 pay bands, in addition to reporting race, ethnicity, and sex. In August of 2017, the Office of Management and Budget (“OMB”) stayed the requirement, but a lawsuit was brought by The National Women’s Law Center and the Labor Council for Latin American Advancement in the federal district court in Washington D.C. On March 4, 2019, the federal district judge vacated the stay, finding that OMB did not sufficiently justify its rationale for blocking the rule. The judge then went a step further, pointedly stating that “OMB’s deficiencies were substantial, and the court finds it unlikely that the government could justify its decision on remand, despite its assertion that ‘OMB could easily cure the defects in its memorandum by further explanation of its reasoning.’”
The contents of covered employers’ reporting obligations have been in flux over recent years. As early as 2012, the EEOC (along with other federal agencies) honed in on the EEO-1 form as a potential means by which pay discrimination could be analyzed and addressed. In 2016, the EEOC published a Federal Register notice announcing its intention to seek a three-year approval from OMB of a revised EEO-1 form, which included data on employees’ W-2 earnings and hours worked. In a second Federal Register notice later that year, the EEOC explained that the EEO-1 should be revised to enforce equal pay laws. However, when the OMB reversed course in August of 2017, covered employers (those with 100 or more employees, or federal contractors or subcontractors with 50 or more employees) were allowed to continue using the old EEO-1 form without pay data.
That all has been upended by this recent court decision.
Employers have long objected to the inclusion of pay data reporting on EEO-1 forms, and critics argue that it would not actually expose pay discrimination. For example, employers who oppose the requirement point to the overly-broad “pay bands” that employees must be artificially grouped into on the EEO-1 form. Thus, for example, a hospital employer might have to count its surgeon, attorney, and accountant employees together in the “Professionals” category, when clearly those positions are vastly dissimilar. Another criticism has been that the EEO-1 form would be misleading in the event that similarly situated employees with identical salaries opt to take different deductions for their 401(k) contributions. In this case, such employees may be mistakenly viewed as having a pay disparity where none exists. Tellingly, and as we have observed before, the EEOC itself appears to recognize this issue, stating that “it 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.” Further, the new reporting requirements require employers to report hours worked, even for employees who are exempt from the overtime and record-keeping requirements of the Fair Labor Standards Act.
It is unclear at this time whether the Trump administration plans to appeal the ruling. The EEOC officially opens the EEO-1 survey on March 18. The reporting deadline was extended to May 31, 2019, in light of the government shutdown. The EEOC may issue a further extension in light of the court ruling. In the meantime, employers may want to immediately begin collecting the required data.
UPDATE: The EEOC has released a statement in light of the D.C. Circuit’s ruling, stating that it is “working diligently on next steps in wake of the court’s order,” and that they “will provide further information as soon as possible.” Accordingly, employers may not have to turn over their pay data for 2018 quite yet.