Why it matters

Continuing the rollback of Obama-era policies, the Equal Employment Opportunity Commission (EEOC) hit pause on the collection of Employer Information Report (EEO-1) pay data and the battle over the Department of Labor’s (DOL) white collar overtime exemption rule came to an end. Last year, the EEOC proposed a revision to the EEO-1 report that would require private employers with at least 100 employees to report pay data about their workers. Although the requirement was set to begin next March, the agency announced the new rule is on hold following a decision by the Office of Management and Budget to stay the rule pending further review. As for the overtime rule—which would have doubled the salary threshold for those covered by the executive, administrative and professional exemption—a U.S. district court judge granted summary judgment in favor of the states and business groups challenging the rule. The DOL then moved to dismiss its appeal of an earlier order in the case, effectively ending the litigation. However, the agency had previously released a request for comment on the rule, keeping alive the possibility of changes to the overtime exemption.

Detailed discussion

In January 2016, the Equal Employment Opportunity Commission (EEOC) proposed a revision to the Employer Information Report (EEO-1) that would require employers to report information about the wages paid to their workers.

Private employers with at least 100 employees (and federal contractors with 50-99 workers) are currently required to file an EEO-1 report sharing the number of individuals they employ by job category and by race, ethnicity and sex. The final rule added pay information to the reporting requirements, with employers required to provide the total number of full- and part-time employees within pay bands and gender, race and ethnicity categories on the current EEO-1 form. Employers were also to tally and report the total hours worked by all the employees in each pay band.

Originally, the pay information was supposed to be added to the reports as of Sept. 30, 2017. But after more than 300 comments were filed on the first draft of the agency’s plan, the EEOC tweaked the final rule to extend the start date until March 31, 2018.

Now the obligation has been put on hold.

In late August, the acting chair of the EEOC announced that she received a memorandum from the administrator of the Office of Information and Regulatory Affairs (OIRA) indicating that the Office of Management and Budget (OMB) “is initiating a review and immediate stay of the effectiveness of the pay data collection aspects” 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,” the OIRA wrote.

“The EEOC remains committed to strong enforcement of our federal equal pay laws, a position I have long advocated,” Acting Chair Victoria Lipnic said in a statement. “Today’s decision will not alter EEOC’s enforcement efforts. … Going forward, we at the EEOC will review the order and our options. I do hope that this decision will prompt a discussion of other more effective solutions to encourage employers to review their compensation practices to ensure equal pay and close the wage gap.”

In the interim, the previous version of the EEO-1 form remains in effect during the OMB’s review process.

A second—and equally controversial rule—also came to a recent halt. In May 2016, the Department of Labor (DOL) published the final regulations updating the so-called white collar exemptions to the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).

Pursuant to the final rule, the agency increased the minimum salary threshold from $455 per week (or $23,660 per year) to $913 per week (or $47,476 per year), equal to the 40th percentile of weekly earnings for full-time salaried employees working in the lowest-wage census region.

Before the final rule could take effect as scheduled on Dec. 1, 2016, a coalition of 21 states filed suit, seeking a preliminary injunction. After reviewing the history of the FLSA and the white collar exemption (also referred to as the “EAP exemption,” for executive, administrative or professional capacity), U.S. District Court Judge Amos L. Mazzant granted the injunction.

The DOL sought interlocutory appeal to the U.S. Court of Appeals, Fifth Circuit, but the January 2017 change in federal administration slowed down the process.

Things sped up after Judge Mazzant issued a new ruling on Aug. 31, 2017, granting summary judgment in favor of the states and a coalition of 56 business groups. The final rule’s revision to the minimum salary threshold exceeded the DOL’s authority, the court found.

“[I]t is clear Congress defined the EAP exemption with regard to duties,” the judge wrote, and the “updated salary-level test under the Final Rule does not give effect to Congress’s unambiguous intent.” The DOL “has used a permissible minimum salary level as a test for identifying categories of employee Congress intended to exempt,” but the final rule “would essentially make an employee’s duties, functions, or tasks irrelevant if the employee’s salary falls below the new minimum salary level,” the court said.

“This is not what Congress intended with the EAP exemption,” Judge Mazzant wrote. “Congress unambiguously directed the Department to exempt from overtime pay employees who perform ‘bona fide executive, administrative, or professional capacity’ duties. However, the Department creates a Final Rule that makes overtime status depend predominantly on a minimum salary level, thereby supplementing an analysis of an employee’s job duties.”

Given this change, the court concluded that the final rule was not based on a permissible construction of the FLSA and that the DOL exceeded its authority.

A few days later, the Department moved for voluntary dismissal of the earlier appeal as moot, likely ending the litigation.

Changes to the white collar exemption remain a possibility, however. In July, the agency published a request for information on potential updates to the exemption. Comments are due by Sept. 25.

To read the OIRA memorandum, click here.

To read the EEOC statement, click here.

To read the opinion in Nevada v. DOL, click here.

To read the DOL’s motion, click here.