Employers should start gathering their 2018 compensation information if they haven’t already.
I have written here and here about the court decision issued on March 4 in the case of National Women’s Law Center v. Office of Management and Budget, which directed the Equal Employment Opportunity Commission to require employers to submit compensation data with their annual EEO-1 reports.
The requirement was imposed in 2016 during the Obama Administration, but in 2017, the Trump OMB suspended the requirement before it was to take effect. The plaintiffs in the lawsuit claimed that the OMB suspension was unlawful, and U.S. District Court Judge Tanya Chutkan of the District of Columbia agreed.
After Judge Chutkan’s order was issued on March 4, the plaintiffs in the lawsuit decided that the EEOC wasn't acting expeditiously enough to comply. The parties had a status conference on March 19 with the judge, who directed the EEOC to provide more information about its intentions by yesterday, April 3.
As of close of business yesterday, nothing had been filed with the court. But late last night, the EEOC filed a "submission" and a declaration (affidavit) from its Chief Data Officer.
The EEOC proposes to require employers to submit their EEO-1 compensation data ("Component 2") for 2018 by September 30, 2019. The EEOC proposes not to require employers to submit 2017 data.
The plaintiffs will have an opportunity to respond to this, and it's unclear what the final outcome will be. It is also possible, if not likely, that the OMB and the EEOC will appeal Judge Chutkan’s March 4 decision and move to stay (suspend) it pending resolution on appeal.
But for now, the timetable for employers appears to be as follows:
May 31 - Deadline to submit 2018 "Category 1" EEO-1 data (the information normally provided every year).
September 30 - Deadline to submit "Category 2" compensation data for 2018.
The Category 2 information consists of 12 pay bands for each of the 10 EEO-1 categories, broken out by race, ethnicity, and sex – or 360 fields of information. Here is an excellent 2017 post from Cara Crotty, chair of our Affirmative Action/OFCCP Compliance Practice Group, explaining what employers need to do. (Cara's post originally had a link to the Category 2 form, but that link is no longer working.)
The declaration of the EEOC's Chief Data Officer, filed last night, says that the EEOC is not equipped to handle whatever comp information it gets:
The proposed timeline for undertaking and closing a collection of Component 2 data by September 30, 2019, raises significant issues with data validity and data reliability. . . . The EEOC has not conducted a true pilot study of the Component 2 data collection measures, instrument, or processes. . . . [I]t is likely that undertaking and closing the collection of Component 2 data by September 30, 2019 would raise major data validity and reliability issues. Under the circumstances, I perceive a significant risk that employers would not be reporting comparable data that can be used by the government or others in meaningful comparisons or analyses.
According to the declaration, because the EEOC is incapable of handling the compensation data in 2019, it will have to contract the work out this year to an independent contractor affiliated with the University of Chicago. The Chief Data Officer says the EEOC should resolve its issues by 2020, in time to receive comp data for 2019.
The declaration estimates the cost to the EEOC of collecting Category 2 information in 2019 to be $3 million. That figure does not include the cost to employers who are subject to the requirement.
Why did the EEOC impose this compensation data requirement if it didn't have the capability to handle what it got? Presumably the answer is that the Chief Data Officer wasn't hired until 2017, roughly a year after the EEOC issued the requirement. The agency apparently didn't know how outdated its data collection and analysis processes were until he came on board and had an opportunity to review.
We will stay on top of all developments and keep you posted.