Labor & Employment Update: EEOC to Require Pay Data Reporting by September 30, 2019

May 31, 2019

The Equal Employment Opportunity Commission (EEOC) has announced that it plans to require employers to submit pay data for the 2017-2018 period by September 30, 2019. All employers subject to EEOC reporting should be aware of and consider preparing for the upcoming reporting requirements.

Background

Employers with 100 or more employees and federal contractors with 50 or more employees are required to submit annual EEO-1 reports. In September 2016, the Office of Management and Budget (OMB) approved revisions to the EEO-1 to include two components. Component 1 requests that employers provide the number of employees by job category, race, sex, and ethnicity. Component 2 requests employee hours worked and pay information across the same categories.

In August 2018, the OMB stayed the implementation of Component 2. In March 2019, in National Women’s Law Center v. Office Management and Budget, No. 17-cv-2458 (TSC) (D.D.C.), a federal district court overturned the stay and reinstated the Component 2 report.  On April 25, 2019, the Court ordered and EEOC agreed that all pay information under Component 2 for the 2017-2018 period must be submitted by September 30, 2019.              

 Pay Data Reporting Requirements

Component 2 requests the hours worked and pay information from employees’ W-2 forms by race, ethnicity, and sex. The pay data must include the pay data for the year broken into 12 pay bands for each job category. An employee’s pay band is determined by the income listed in box 1 of the employee’s W-2 form. The W-2 pay data must be split into the 12 pay bands required for each of the 10 EEO-1 categories (see https://www.eeoc.gov/employers/eeo1survey/jobclassguide.cfm).  The pay bands track the 12 pay bands used by the Bureau of Labor Statistics and should be available as the Department of Labor updates its website.  Employers must also report the total hours worked by all employees. For exempt employees, employers are allowed to report 40 hours per week for a full-time employee and 20 hours per week for a part-time employee. 

Recommendations

Employers should immediately begin collecting and examining the Component 2 pay data for 2017-2018 period. Collection of the required data may prove to be a significant burden for employers, particularly for very large employers or employers without a support staff to aid in the process. Employers should also compare the data for employees in different categories to ensure that there are no disparate impact concerns for employees belonging to protected classes. Any evidence of disparate impact could potentially expose the employer to legal liability. Employers cannot forget that the Component 1 report must still be filed with EEOC by May 31, 2019.

 This Labor & Employment Update is intended to keep readers current on matters affecting employment law and is not intended to be legal advice. If you have any questions, please contact Walter Foster at 617.342.6853 or wfoster@eckertseamans.com.

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