QUESTION:  I heard a couple of years ago that there would be new requirements on what employers have to report to the Equal Employment Opportunity Commission about the race, sex and ethnicity of workers, but I haven’t heard anything recently. Is my company OK if we don’t make a report to the EEOC?

ANSWER:     If your company employs fewer than 100 people, you’re off the hook, and don’t have to file an EEO-1 report, which lists the number of people you employ by job category, race, sex and ethnicity, with the EEOC. If you’re a private employer with at least 100 employees, you should have been reporting this information every year. In fact, this year you will need to report even more information: The EEOC announced this month that covered employers must report employee pay data information for 2017 and 2018 by September 30, 2019. The requirement is the result of a recent ruling by the U.S. District Court for the District of Columbia.

            For more than half a century, private employers of at least 100 people have been asked to file an Employer Information Report, or EEO-1, with the EEOC and keep a copy of the most recent report at their headquarters, or divisional headquarters. The report asked for the number of employees by race, ethnicity and gender employed in each of 10 categories. In 2016, the Office of Management and Budget approved a new report, EEO-1, Component 2, after a five-year process. The never-implemented Component 2, expands on the basic idea of the EEO-1, but also requires to report “aggregate W-2 pay data in 12 bands for the 10 EEO-1 categories.”

            The requirement pits workers’ groups and employers’ groups against each other. Workers claim the new forms would provide a wealth of information with which to fight pay disparities based on race, sex or ethnicity, while employers argue the new form is too detailed and would take too much time to complete. The EEOC, which initiated the revision, estimated the new form would take about an extra four hours to do – at a nationwide cost to businesses of just about $53.5 million. In contrast, the U.S. Chamber of Commerce estimated use of the new form would cost businesses a total of over $400 million in labor costs alone.

            In 2017, the Chamber wrote the Office of Management and Budget (OMB) asking it to review the approved form. In August of that year — just before use of the new form was to go into effect — the OMB issued an order staying its use. That move was countered in November 2017 when the National Women’s Law Center and the Labor Council for Latin American Advancement (LCLAA) filed suit claiming that the OMB had exceeded the scope of its authority when it stayed the new rule.

            And, until March of this year, the new rule stayed on ice, and private employers could continue to use the old, so-called easier, form.

            Then, on March 4, 2019 Judge Tanya Chutkan of the DC Circuit ruled in favor of the plaintiffs, and lifted the OMB’s stay. The EEOC recently announced that businesses that normally file the EEO-1 form should be prepared to submit Component 2 data for calendar year 2017 and 2018 by September 30, 2019.

            What does this rather convoluted history mean for you and your firm? Better start gathering the information required on the new form. While another appeal has already been filed, use of the Component 2 will not be put on hold while that appeal, by the Department of Justice, is heard. Besides, having information about how you pay your workers by job category race/ethnicity and gender could help you defend against lawsuits alleging violations of the Civil Rights Act or the Equal Pay Act, and help you avoid getting into hot water in the first place. Being able to see how much you pay your workers, by job class and protected categories, can help you determine if there are any disparities in your treatment of your employees, and enable you to remedy the problem before it is discovered by a litigious worker with an axe to grind.

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By: Daniel A. Gwinn, Esq.
Attorney and Counselor at Law

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