- Employers have until September 30, 2019, to gather information about employee hours and pay rates, broken down by job category, race, ethnicity, and sex of your employees back to 2017.
- There is a help desk at the EEOC accessible via email (firstname.lastname@example.org) or toll-free at 877-324-6214 that can help.
- The change is a result of a court case that involved the Trump administration overruling an Obama-era rule.
Earlier this year, employers were required to submit EEO-1 Component 1 data on employees. That means you need to gather information on the race, ethnicity and sex of your employees, separated by job category. Component 2 would be employee hours and pay information. But, in 2017, the federal government said part two would be unnecessary. There was a lawsuit, which overruled that decision. Fast-forward to today, and you have a deadline looming for a lot of small business owners.
How we got here
While the Equal Employment Opportunity Commission (EEOC) is on the verge of receiving an avalanche of pay data forms from many American employers, many companies are scrambling to locate, organize, and submit the newly prescribed data regarding the gender, ethnicity, and job category of its workforce.
This is all due to a March 5, 2019, ruling in the U.S. District Court of Columbia in Texas Women's Law Center, el al., vs. Office of Management and Budget, et al., (Civil Action No. 17-cv-2458 (TSC). In vacating the Office of Management and Budget's (OMB) stay of the EEOC's pay data collection tool, the court ordered OMB's previously approved and revised EEO-1 form to be in effect.
That left employers wondering if the court ruling meant pay data forms for 2017 and 2018 were to be filed by the prescribed deadline for the 2018 figures, which was May 31, 2019. However, in the spring, the EEOC informed impacted employers they are to file EEO-1 Component 2 compensation data forms for both years by September 30, 2019.
How the EEO-1 changes impact small business
The immediate impact on the affected entities is not surprising. According to Arthur Tacchino, founder and chief innovation officer of SyncStream Solutions, a New Orleans, Louisiana, company offering EEO-1 and Affordable Care Act (ACA) compliance solutions, many companies "are scrambling around to locate that info for 2017."
Meanwhile, company owners are not the only people scurrying to meet the new filing requirement. While the September 30 filing date is clear, "the EEOC is not even able to accept the info," yet, says Tacchino.
People seeking assistance in complying with the new ruling would be wise to send an email to the EEOC rather than searching for online help. That's because the EEOC opened a help desk in June accessible via email (email@example.com) or toll-free at 877-324-6214.
According to the EEOC website, Component 2 EEO-1 file layout specifications and accompanying Excel files for 2017 and 2018 were made available July 11 in its More Info and Additional References section. Employers should have received system login information via USPS and email on July 15, 2019. Meanwhile, a secure file upload function and validation process are expected to be available by mid-August.
What you need to do now
The court ruling in Texas Women's does not require every American employer to provide the EEOC with gender, ethnicity and job category statistics for 2017. Rather, employers, including federal contractors who had 100 or more employees during the 2017 workforce snapshot period, must submit the data.
Companies, including federal contractors which employed 100 or more workers during the 2018 workforce snapshot window, must file the Component 2 compensation data forms for that year. A workforce snapshot is defined as a pay period falling between October 1 and December 31 of the reporting year.
Federal contractors with staffs numbering between 1 and 49, and private employers with 1-99 employees are not required to file either EEO-1 Component 1 data or Component 2 data forms.
According to Terese M. Connolly, a partner in the Labor and Employment department of Culhane Meadows PLLC in Chicago, the data to be reported applies to employees on payroll during that snapshot window who also report end of year.
The component of pay and hour data is an "added component" to the ruling, she says.
Moreover, when employers create their reports, they are to base their determinations of which employee's data should be included utilizing the definitions promulgated in the Fair Labor Standards Act, grouped by EEO-1 categories, says Connolly.
To report the requisite data on the EEO-1 form, employers will need to locate the information first. If a company outsources its paycheck services to a third-party vendor, that's where the search for the information should begin, says Connolly.
"It's a data compilation nightmare," she says.
The history of EEO-1 pay data
The seeds for the Texas Women's case were planted during the Obama administration. At that time, the EEOC planned on implementing new data reporting requirements of employers to begin in 2017. However, when President Trump took office, he decided to allow the OMB to determine if it wanted to implement Obama's promulgations. It did not.
The basis of the Texas Women's case was its desire to have the EEOC expand its data reporting requirements to study discrepancies in workforce statistics. The organization wanted additional data regarding the gender, ethnicity and job categories of employees covered by an EEO-1 filing to support its efforts to push for legislation that would fight wage discrimination. It also urged the EEOC to bring claims against Texan employers accused of wage discrimination, says Tacchino.
"A lawsuit was filed because they wanted the additional reporting requirements but Trump did not," says Tacchino. In rejecting the Obama plan, the OMB argued the Paperwork Reduction Act precluded the collection of the data. However, the District Judge spurned the EEOC's argument, ruling its actions had been "arbitrary and capricious."
Assuming the district court's stay is affirmed on appeal, meaning the additional reporting requirements remain in effect, Tacchino isn't sure the link between its stated goal of gathering employment data for discrimination analysis is compelling. He's not alone.
The U.S. Chamber of Commerce, the Society for Human Resource Management and more than a dozen other employer organizations have expressed disdain about the expanded requirements.
"They believe, and I agree, that the data being submitted is too vague for a true analysis. For example, they argue that the EEOC job categories are very broad, and it is conceivable that employees of very different job scenarios could fall under the same EEOC job category, but their pay may be justifiably different. This could create a false positive for pay discrimination. An analysis done by the EEOC can also not take into account other pay determining factors, such as education level, length of employment, and more. Because of this, the analysis the EEOC is proposing cannot truly be accurate," said Tacchino.
Connolly agrees. "Some people argue you may not get the desired information since proxy hours can be used."