Government Contracts & Investigations

End to EEO-1 Component 2 Pay Data Reporting for Now…

On February 10, 2020, in National Women’s Law Center v. Office of Management and Budget, the U.S. District Court for the District of Columbia ordered the Equal Employment Opportunity Commission’s (EEOC’s) collection of gender and race pay data complete. This marks the end of a long-fought battle that has been raging since 2016 over whether and how the EEOC could require covered employers to submit pay data as part of the EEO-1 Report that these companies are already required to complete each year.

Covered employers include private companies with 100 or more employees and federal contractors with 50 or more employees. Covered employers are required to file the EEO-1 Report each year, identifying the number of employees in various job groups by race and sex (“Component 1”). The long-fought battle concerned whether to add gender and race pay data (“Component 2”) to the EEO-1 Report.

On January 29, 2016, the EEOC announced proposed revisions to the Employer Information Report (EEO-1) that would require collection of pay data beginning in 2017. On September 29, 2016, the White House’s Office of Management and Budget (OMB) under President Obama approved the revised EEO-1 Report. However, after President Trump took office, the OMB brought a lawsuit in the U.S. District Court for the District of Columbia and successfully stayed that requirement on August 29, 2017, prior to the date on which covered employers had any legal obligation to gather and submit pay data.

Various groups challenged the OMB’s stay, and initiated litigation to have the pay data requirement reinstated. On March 5, 2019, the U.S. District Court for the District of Columbia vacated the decision of the OMB to stay and reconsider the EEOC’s 2016 revised EEO-1 Component 2 pay data collection. On May 2, 2019, the EEOC announced that it will collect 2017 pay data along with 2018 pay data by September 30, 2019.

As a result, the EEOC began collecting pay data in a revised EEO-1 form, OMB Control No. 3046-0007, for calendar years 2017 and 2018 in mid-July 2019. The revised EEO-1 form organized pay data into categories of race, sex, ethnicity, and job group. That information was then sorted into one of 12 pay bands, creating a grid. The revised EEO-1 form does not expire until April 5, 2021.

Initially, the District Court set a deadline of September 30, 2019 for collecting pay data. However, the deadline was pushed back when the Court determined that more employers needed to submit their data. As of February 7, 2020, 89% of all eligible employers had submitted pay data to the EEOC.

Despite the collection being complete, the EEOC and the OMB are still appealing the District Court’s orders. The government claims that the Court exceeded its authority by reviving and instituting the Obama-era pay reporting requirement and setting how and when the collection of pay data could occur.

On September 11, 2019, the EEOC announced in the Federal Register that it intends to submit to OMB a request for a three-year approval of Component 1 of the EEO-1 and does not intend to submit to OMB a request to renew Component 2. The Office of Federal Contract Compliance Programs (OFCCP) has said it will not request, accept, or use Component 2 pay data, but it will continue to use Component 1 data.

Even though the EEOC and the OFCCP are purportedly not actively collecting and/or using compensation information in the EEO-1 report, it is critical that all employers—particularly government contractors—regularly conduct pay equity analyses in preparing for OFCCP audits. Compensation information is requested as part of OFCCP audits, separate and apart from the EEO-1 Report. Disparities in compensation remain a focus of OFCCP and allegations of discrimination in compensation have resulted in litigation and significant settlements in recent years.

In fact, in 2019, OFCCP obtained a record $40,569,816 in monetary settlements for affected class members, which is $16 million more than the next highest year. The three-year total of monetary settlements for 2017-2019 is the highest three-year period on record and exceeded the prior seven years (2010-2016) combined. Recently, OFCCP reached a $5 million settlement with Intel Corp. to resolve pay discrimination allegations brought by African American and Hispanic American employees at its facilities in Arizona, California and Oregon.

Contact Amy Conway, Stephanie Scheck, Carroll Wright for more information.