In 2016, under the Obama administration, the EEOC significantly revised its EEO-1 report to require that covered entities - private employers with 100 or more employees, or federal contractors with at least 50 employees - begin to report how much they pay workers, broken down between sex, race and ethnicity. The stated rationale for this change was to enable the EEOC to root out pay gaps presumed to exist between genders, races, and ethnic groups. Employers and eventually, the Trump administration, opposed the measure as being overly burdensome; however, those efforts were eventually unsuccessful in court. Therefore, barring further intervention from the courts it is no longer a question of whether employers must begin to provide payroll data to the federal government's EEOC, but when and how. These questions have now been answered, at least for now. On April 25th, a federal judge in Washington, D.C. ordered that covered employers have until September 30, 2019 to comply with the Equal Employment Opportunity Commission's (EEOC) revised EEO-1 reporting requirements.
The EEOC has long gathered date from covered employers each year on the makeup of their workforces, based on sex, race and ethnicity. Most employers are familiar with this annual ritual and the means by which they are to gather and produce such data. Employers must still provide this so-called "Component 1 data" by May 31, 2019. However, the additional requirement to provide payroll data "Component 2 data" as between these same groups, is both new and potentially challenging for employers. More importantly, for employers who have not previously analyzed such data internally, via self-auditing measures, these disclosures may well lay the groundwork for class action litigation based on pay disparities that cannot be rationally explained on legitimate business grounds. With just 5 months to compile and assess payroll information before turning it over to the EEOC by 9/30/19, employers are well advised to take immediate action toward compliance and self-auditing (if they have not done so already).
Update: The EEOC made an announcement on this issue on April 29, 2019 which confirms the September deadline while also stating that the EEOC will begin accepting submissions of the #2 EEO-1 reports, beginning in late July.
Our advice to employers is to not submit anything early, but wait it out to see whether there are any appeals from the district court's decision that may once again, stay or prevent its implementation.
For help with determining whether your organization is covered by the new reporting requirement, which separate facilities may be covered, the appropriate period to measure, and other miscellaneous questions on preparing and submitting the Component 2 EEO-1 data, contact any of our Wessels Sherman Attorneys in Minnesota, Illinois, Iowa, or Wisconsin.