The EEO-1 Report is a compliance survey mandated by federal law. Generally, employers with 100 or more employees and federal government prime contractors and first-tier subcontractors with 50 or more employees and federal contracts worth at least $50,000 are required to submit EEO-1 Reports to the U.S. Equal Employment Opportunity Commission (EEOC) annually.
A brief history on the expansion of the EEO-1 data reporting requirements
Historically, the EEO-1 Report has required employers to disclose certain demographic data on their workforce population based on job category, gender, race and ethnicity.
In 2016, the Obama Administration announced a plan to expand the EEO-1 data reporting requirements such that employers would be required to report two sets of data: “Component 1” data and “Component 2” data. Component 1 data includes the customary gender, race and ethnicity data historically required in the EEO-1 Report. Component 2 data, which was not previously required in the EEO-1 Report, includes an aggregate of all employees’ W-2 earnings and hours worked based on job category, salary range, gender, race and ethnicity.
The new pay data reporting requirements were scheduled for implementation during the 2017 EEO-1 reporting cycle, for which the filing deadline was March 31, 2018. However, in August 2017, the Trump Administration indefinitely froze the revised EEO-1 Report to reevaluate the need and purpose of the new reporting requirements.
In November 2017, the National Women’s Law Center and the Labor Counsel for Latin American Advancement filed a lawsuit against the federal Office of Management and Budget (OMB) and the EEOC, among other defendants, in the U.S. District Court for the District of Columbia challenging the Trump Administration’s decision to freeze the revised EEO-1 Report. In a series of orders entered in March and April 2019, the Court ordered the EEOC to implement the expanded EEO-1 data reporting plan and to collect Component 2 pay data from employers for a two-year period.
On May 3, 2019, the EEOC issued a notice stating that, pursuant to the Court’s orders, it will require all employers to submit EEO-1 Component 2 pay data for both 2017 and 2018 by September 30, 2019.
What should employers do to comply with EEO-1 reporting requirements
Early preparation by covered employers will be key to minimize the administrative impact imposed by the expanded EEO-1 reporting requirements. This is particularly true for employers that will have to manually collect and/or review the required pay data due to whatever limitations they might face relating to the capabilities of their existing payroll systems. Below is an outline of the steps that employers can take now to lay the groundwork for an efficient reporting cycle.
As an initial matter, employers must be mindful that they face different deadlines for reporting Component 1 and Component 2 data.
Component 1 data: The deadline for reporting Component 1 data for 2018 is May 31, 2019. Employers can satisfy this reporting requirement by reporting the customary workforce demographics data utilizing the reporting procedures used in prior years. The EEOC encourages employers to submit EEO-1 Reports electronically using its EEO-1 online filing application system, although it also allows for certain alternative formats.
Component 2 data: Employers are required to report Component 2 pay data for its workforce for 2017 and 2018 on or before September 30, 2019. The EEOC has not yet made available an online portal or other means for submitting the data, but it expects to begin collecting the requisite pay data in mid-July 2019. The EEOC has stated that it will announce more specific guidance regarding the Component 2 data reporting procedures when such details become available.
Although the stated timeframes may be weeks away, employers immediately should develop a plan to aggregate their employees’ W-2 earnings and hours worked to comply with the new Component 2 pay data reporting requirements.
Unfortunately, the EEOC has not issued recent guidance for employers on how information should be aggregated and reported. However, based on the EEOC’s guidance from 2016, employers should be prepared to separately aggregate employees’ W-2 earnings and hours worked under the customary 11 job categories, genders, races and ethnicities used for EEO-1 demographic reporting. In addition, W-2 earnings and hours worked data must also be aggregated by 12 annual salary ranges called “pay bands.” Similar to customary EEO-1 reporting, employers will be able to choose a pay period during a three-month range within each reporting year. In developing their plan to comply with these requirements, employers will have to determine an appropriate and efficient method to aggregate this information.
Again, in this current reporting cycle, employers will be required to collect, aggregate and report such wage and hour data for two years (2017 and 2018) rather than just one year.
For many employers, this pay data may not be easily gathered due to limitations with their payroll systems and/or the electronic pay records maintained by the employer. Given the time it may take to gather and aggregate this data, planning now will alleviate some of this burden.