Employers should prepare themselves for additional reporting requirements after a Washington, D.C., judge vacated the moratorium on the application of the Equal Employment Opportunity Commission’s revised EEO-1 form collecting pay data.

In 2016, the EEOC proposed a revision to the EEO-1 form that would require private employers with at least 100 employees (and federal contractors with 50–99 workers) to add pay information to the data reported, joining other data points such as race, ethnicity, sex and job category. The final rule instructed employers to provide the total number of full- and part-time employees within pay bands and gender, race and ethnicity categories; employers were also to tally and report the total hours worked by all the employees in each pay band.

The collection of pay data served a twofold purpose, the agency explained: The data would help employers evaluate their own pay practices to prevent pay discrimination and would further the federal government’s efforts to combat the problem. The EEOC published a Federal Register notice explaining that employers would provide the information either through online filing or by uploading an electronic file.

Later, the agency filed a second Federal Register notice seeking approval from the Office of Management and Budget for the revised EEO-1 pay data collection. The OMB granted its approval in September 2016. Subsequently, the EEOC released an instruction booklet as well as information about the revised form, including data file specifications for employers who planned to file using a data upload.

But with the change in federal administration, the rule was put on indefinite hold in 2017 when the EEOC chair announced she had received word from the OMB that it was “initiating a review and immediate stay” of the revised EEO-1 form.

“Among other things, OMB is concerned that some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome and do not adequately address privacy and confidentiality issues,” OMB said, citing the subsequent release of data file specifications.

In response, the National Women’s Law Center and the Labor Council for Latin American Advancement filed suit. The workers’ rights groups argued that the OMB and its officials violated both the Administrative Procedures Act (APA) and the Paperwork Reduction Act (PRA), exceeding their statutory authority in reviewing and staying the revised pay data collection.

Ruling on cross motions for summary judgment, U.S. District Judge Tanya S. Chutkan sided with the plaintiffs. Under its own regulations, the OMB may review a previously approved collection of information only when “relevant circumstances have changed or the burden estimates provided by the agency at the time of initial submission were materially in error.”

“OMB has not shown that a relevant circumstance has changed or that the burden estimate provided was materially in error,” the court said. “Moreover, it has not shown good cause.”

The OMB’s assertion that the data file specifications released by the EEOC were not contained in the Federal Register—and thus deprived the public of an opportunity to comment on them—is “misdirected, inaccurate and ultimately unpersuasive,” the court wrote. “EEOC described in detail the information it proposed to collect. The government’s argument therefore focuses on a technicality that did not affect the employers submitting the data.”

OMB failed to explain “in any substantive way” why it believed that the revised EEO-1 was contrary to PRA standards, Judge Chutkan added. While agencies are free to change their existing policies, they must provide “a reasoned explanation for the change,” and OMB’s action in staying the EEOC’s pay data collection “totally lacked the reasoned explanation that the APA requires,” making it “arbitrary and capricious.”

OMB pointed to four letters it received after the EEOC posted details about the file specifications, but the court said one of the letters did not even discuss the file specifications and the others did not provide any analysis or state that the specifications would increase the burden on EEO-1 filers.

Mere speculation—or the speculation of commenters—cannot suffice for APA review purposes, the court said, and an agency must conduct a critical examination of comments on which it relies. Here, however, “the government has failed to demonstrate any likelihood that the data file specifications meaningfully increase the burden on employers.”

Concluding that the OMB’s stay of the EEOC’s pay data collection was illegal and its “deficiencies were substantial,” the court granted summary judgment in favor of the plaintiffs and vacated the stay of the revised EEO-1 form.

To read the memorandum opinion in National Women’s Law Center v. Office of Management and Budget, click here.

Why it matters: Employers should brace themselves for the new reporting requirements, as Judge Chutkan ordered that the previous approval of the revised EEO-1 form “shall be in effect.”