On March 4, 2019, the U.S. District Court for the District of Columbia surprised the employer community by vacating the White House Office of Management and Budget's (OMB) stay of the revised EEO-1 form’s pay data reporting requirements. National Women’s Law Center v. Office of Management and Budget, No. 17-cv-2458 (D.C. Cir. Mar. 4, 2019). As a result, it appears the Equal Employment Opportunity Commission (EEOC) could begin requiring pay data on future EEO-1 forms, although much uncertainty remains.
Compensation Reporting Requirement
Generally, each year employers with 100 or more employees, and federal contractors with 50 or more employees, are required to file the EEO-1 report, providing the EEOC with data on the number of individuals employed, their distribution by legal entity and location, and their demographic characteristics. During the Obama administration, the EEOC sought to expand government records on pay gaps by gender and race by collecting pay data that could be correlated to employee demographic groups. To that end, in September 2016, the EEOC announced that starting in March 2018, it would collect summary employee pay data from certain employers on revised EEO-1 reports.
The employer community's reaction to the increased requirements for the EEO-1 report was almost uniformly negative. Businesses explained the report would be difficult to complete and would likely require substantial investments in personnel and software in order to be able to efficiently address the requirements. At the same time, there was substantial uncertainty as to whether the collected data could be effectively used by the EEOC for its stated purpose.
In a statement issued on August 29, 2017, EEOC Acting Chair Victoria Lipnic announced she had received a memo from the Office of Information and Regulatory Affairs, informing her that it was initiating a review and immediate stay of the effectiveness of the pay data collection aspects of the EEO-1 form.
A few months after the EEOC announced this indefinite stay of the additional reporting requirements, the National Women’s Law Center (NWLC) sued the OMB and the EEOC, claiming that the agencies had violated the Paperwork Reduction Act and the Administrative Procedure Act (APA) and exceeded their statutory authority in reviewing and staying the collection of pay data as part of EEO-1 reporting. The advocacy group asked the court to overturn the OMB stay of the pay and hour data requirement and declare the revised EEO-1 form in effect.
The OMB justified its decision to discontinue the EEO-1 pay data requirements by alleging that the notice for the revised EEO-1 was not specific enough in its description of the data reporting required and that the data collection would be overly burdensome for employers.
The court, however, found the OMB's reasons for the stay insufficient. The court stated, "OMB merely speculated that the initial burden estimate ‘may’ be incorrect, while failing to support its speculation with any analysis.”
What Does This Mean for Employers?
As a result of the new court decision, employers could again be required to provide the pay and hours and statistics in their future EEO-1 reporting. In practice, however, this deadline may not be a line, but a moving target. It is likely the OMB will appeal this decision, and the EEOC will revise the reporting guidelines to withstand further judicial scrutiny. Employers should stay abreast of developing news on the EEO-1 ruling and future legal challenges. The current 2018 EEO-1 report deadline, without the pay and hours worked data, has been extended May 31, 2019.