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Federal District Court Reinstates EEO-1 Pay Data Reporting Requirements (For Now)

March 22, 2019 Leave a comment

MLM Headshot Photo 2019 (M1341570xB1386)By: Matthew Mitchell

In September 2016, the U.S. Equal Employment Opportunity Commission (“EEOC”) announced plans to collect employee compensation data as a component to its annual EEO-1 employer information reporting requirement. This pay data reporting requirement – known as “Component 2” – was slated to go into effect in March 2018, and would have required all private employers with over 100 employees, and certain smaller, government contractors, to report W-2 wage information and total hours worked, for all employees, by race, ethnicity, and sex, within 12 proposed pay bands. Component 2 was an aspect of Obama-era reforms aimed at strengthening EEOC capacity to identify and prevent pay discrimination.

In August 2017, the White House Office of Management and Budget (“OMB”), under the Trump Administration, stayed the implementation of Component 2, indicating that Component 2 disclosure requirements were unreasonably burdensome for employers – the U. S. Chamber of Commerce estimated that Component 2 would result in $400 million in additional administrative costs to employers. That action by the OMB prompted a lawsuit by the National Women’s Law Center and the Labor Counsel for Latin American Advancement against the OMB and the EEOC.

On March 4, 2019, the U.S. District Court for the District of Columbia issued an opinion reinstating Component 2, concluding that the OMB did not have a sufficient basis to support its decision to stay Component 2. The Court’s decision may have significant implications for employers. The current EEO-1 Report filing deadline is on May 31, 2019, and it is unclear whether Component 2 pay data disclosures will be required for the May 31 reporting cycle.

It remains to be seen whether the ruling is appealed, whether the EEOC issues any special instructions in light of the ruling, or whether the EEOC takes steps to revise its EEO-1 reporting guidelines (although the EEOC does not presently have a quorum to effect such a change). Morse Barnes-Brown Pendleton’s Employment Law Group will continue to monitor this issue, and will provide updates as they become available.

For more information, please contact Matt Mitchell.