EEO-1 Update Summary
As ordered by the U.S. District Court for the District of Columbia, the EEOC yesterday confirmed on its website that Component 2 pay data for calendar year 2018 must be filed by Sept. 30, 2019.  The agency expects their submission portal for Component 2 data to be available by July 15, 2019.  Note that Component 1 race, gender and ethnicity data for calendar 2018 still must be filed no later than May 31, 2019 using the currently available portal.

The EEOC further confirmed that it will announce by May 3 whether it will also collect 2017 or 2019 calendar year pay data. If the EEOC indicates that it will collect 2017 pay data, EEO-1 filers will likely be required to submit wage information for 2017 along with the 2018 information by the Sept. 30, 2019 deadline.  Should the EEOC elect to receive 2019 pay data instead, 2019 wage information will likely need to be filed during the 2020 reporting period. The EEOC has until May 3 to notify the court of its choice.  

What It Means
Employers have had to submit Component 1 data reflecting employees of the business by job category, race, ethnicity and sex on an annual EEO-1 form. In 2016, EEOC issued a revised EEO-1 form that also required employers to report Component 2 wage information. The Component 2 data requirements have been up in the air as litigation over the Component 2 data has been ongoing.

Following lengthy court battles, the EEOC will in the near future begin collecting Component 2 wage data from businesses with at least 100 employees and from federal contractors with at least 50 employees and a contract with the federal government of $50,000 or more.

Component 2 data includes two elements: summary pay data and aggregate hours worked data. Employers are required to report summary pay data including the total number of full and part-time employees across 12 pay bands for each of the 10 EEO-1 job categories and gender, race, and ethnicity categories on the current EEO-1 form. In selecting the appropriate pay band for employees in each job category, employers will report the income provided in Box 1 of the employee’s W-2 form. For aggregate hours worked data, employers will be required to tally and report the total hours worked by all the employees accounted for in each pay band. For exempt employees, employers may report a proxy of 40 hours per week for a full-time employee (or 20 hours for a part-time employee) or the actual number of hours worked by the exempt employee.

Employer Strategies
The possibility of an appeal regarding the Component 2 data requirements or a stay pending an appeal still exists. However, employers should keep in mind that regardless of what happens regarding Component 2 wage data reporting, they still must submit their 2018 data for Component 1 of the EEO-1 form by May 31.

In the meantime, EEO-1 filers should begin to prepare for the Component 2 filing requirements. Compiling Component 2 data will be more complex than the Component 1 data requirements since employers may use different payroll vendor systems at different locations, some employees may have only worked for part of the year, and other employees’ payroll categories may have been reclassified during the relevant year. Accordingly, many companies will need to identify how to pull and coordinate payroll and demographic information. This may require advance planning as many companies use separate systems to maintain demographic data versus comp data. Employers should inquire with their current vendors or look for outside vendors that may be able to assist them with this reporting requirement.

Since it remains unclear whether calendar year 2017 pay data will ever be reported, employers should first focus on compiling their 2018 data and conduct an assessment of their systems where such data is retained. This is an opportune time for employers to partner with counsel to conduct a pay audit to sample running the data and to proactively identify potential areas of disparity that may require explanation before submitting the pay data to the EEOC.

We will keep you updated on any new developments. In the meantime, if you have any questions regarding pay data collection requirements or auditing pay practices, please contact Bullard Law.