Executive Summary: On March 4, 2019, the U.S. District Court for the District of Columbia ruled to reinstate Obama-era revisions to the pay data reporting requirements established by the Equal Employment Opportunity Commission (EEOC), which effectively expand employers’ EEO-1 reporting requirements and obligate them to submit detailed employee pay data annually to the EEOC. This ruling will have important consequences for employers, and has raised understandable uncertainty and concern among the business community.
Background: The EEOC has long required private employers covered by Title VII of the Civil Rights Act with 100 or more employees and federal contractors with 50 or more employees to submit annual reports, known as EEO-1 submissions, which break down the number of workers employed with the company based on gender, race, and ethnicity. On September 29, 2016, the EEOC revised its pay data reporting requirements to expand the obligations placed on employers by requiring them to submit detailed information on employees’ wages and hours.
The revised EEO-1 submission is comprised of two components. Component 1 remains unchanged from the prior iteration of the EEO-1 report; it seeks employee data broken down by gender, race, and ethnicity within 10 defined job classifications. Component 2, the implementation of which was stayed by the Office of Management and Budget (OMB) and was the focus of the lawsuit, requires employers to report W-2 wage data and hours worked broken down by gender, race, and ethnicity within the 10 defined job classifications, and within 12 pay bands. The pay data component expands the EEO-1 form from 180 data cells to 3,660 data cells, and rather than simply reporting the number of employees in each gender and race or ethnicity category, employers must now track and report aggregate hours worked within each job classification and pay band. When the EEOC initially established the revisions, it contended that “[p]ay bands would generate reliable aggregated data to support meaningful statistical analysis” and support the agency’s ability to “discern potential discrimination.”
Many employers, on the other hand, expressed concern that the new reporting requirements would be overly burdensome, exponentially complicating the reporting process. In addition, employers and industry experts expressed concern that the arbitrary salary ranges of each pay band could, in some instances, distort pay data, resulting in apparent disparities where none in fact exist.
In addition to the criticism and concern evinced by members of the business community and industry experts, the agency’s EEO-1 revisions were criticized by the EEOC’s own Commissioner, Victoria Lipnic. During a 2016 conference, Commissioner Lipnic voiced her opinion that, as a policy matter, the EEO-1 pay data report proposal was “past its prime and should be relegated to the heap of bad policy ideas once and for all.” While acknowledging the existence of a pay disparity, Commissioner Lipnic suggested...
