Posted By Nadia A. Lampton of Taft Law, Thursday, August 8, 2019
Under federal law, employers with at least 100 employees, as well as some federal contractors with at least 50 employees, are required to annually submit an EEO-1 form to the Equal Employment Opportunity Commission (“EEOC”). One portion of the EEO-1 form has not changed for years, which asks for the number of employees who work for the company, sorted by job category, race, sex, and ethnicity. This has become known as “Component 1” data.
In 2016, the EEOC noticed its intent to begin collecting data on employees’ W-2 earnings and hours worked, also sorted by race, ethnicity, and sex. This data has become known as “Component 2” data. Although the Office of Management and Budget (“OBM”) initially approved of the proposed data collection in September of 2016, it later decided to initiate a review of the new collection of pay data, in August of 2017, and stayed the collection of Component 2 data.
In response, the National Women’s Law Center and other parties filed suit in federal district court and requested that the Court vacate the stay and reinstate the revised EEO-1 reporting requirements to include a requirement to report Component 2 data. See National Women's Law Center, et al., v. Office of Management and Budget, et al., Civil Action No. 17-cv-2458 (D.D.C.).
Ultimately, the Court vacated OBM’s stay on the collection, and ordered that the previous approval of the revised EEO-1 form be in effect. While the Department of Justice filed a Notice of Appeal in this case, the appeal does not stay the order of the federal district court. This means that employers must submit Component 2 data for calendar years 2017 and 2018 by September 30, 2019.
The collection and reporting burden on employers associated with Component 2 data is a heavy one. Unlike the Component 1 data, which essentially asks for a headcount sorted by job category, race, sex, and ethnicity, Component 2 data requires specific pay data, which requires a much greater amount of work on the employer to compile. This is because the revised EEO-1 form requires employers to report earnings information from Box 1 of the W-2 form, as well as the total number of hours worked for all employees. Again, all of this data is sorted by job category, race, sex, and ethnicity.
If not already underway, employers should assess the systems they currently have in place that store the relevant demographic, pay, and hours-worked data, and should determine how to best compile that data. If an employer uses a third-party vendor for payroll or other human resources functions, it should contact the vendor immediately to seek assistance with the Component 2 reporting requirement. Under certain circumstances, employers may obtain an extension for filing with the EEOC; however, because this is entirely within the EEOC’s discretion, employers should not expect to receive such an extension, and should be fully prepared to submit Component 2 data for calendar years 2017 and 2018 by September 30, 2019.
Filing for 2017 and 2018 data is now open, and can be completed online through the EEOC portal at https://eeoccomp2.norc.org.
For any additional questions or concerns concerning your company’s reporting requirements, use your Legal Services Plan and contact labor and employment law attorney Nadia A. Lampton at (937) 641-2055 or email nlampton@taftlaw.com.