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Employers should begin preparing to turn over EEO-1 pay data by September 30, 2019, details to follow from EEOC shortly

A federal trial court judge in the District of Columbia cleared the path for the EEOC controversial rule requiring employers to turn over two years of pay data by September 30, 2019. The court’s order follows a recent decision in which the judge provided further reasoning. In short the court held that, in this battle between two federal agencies (the EEOC and the OMB), the Trump administration’s OMB had failed to establish a basis for freezing the Obama-era EEOC’s pay-data collection rule. That Obama-era rule (2016) added to the longstanding workforce data requirements for an EEO-1 (which the EEOC now calls the “Component 1” data requirements), a requirement to submit pay data as well designed to demonstrate pay gaps related to gender, race, and ethnicity (now called the “Component 2” data requirements).

Which two years of data will be required and when can an employer start submitting its EEO-1? The judge gave the EEOC leeway to decide, but ordered it to post on its website an initial decision by April 29 and the final decision on May 3. The EEOC’s website states it is already “working diligently on next steps in the wake of the court’s order.” The EEOC notes its portal for submission of Component 1 data is already open.

Employers will want to visit the EEOC’s website following April 29 and again following May 3, at least, for further information on this breaking development.

Office of Management and Budgets (OMB) rejects EEOC’s revised EEO-1 Form

The OMB rejected the EEOC’s new EEO-1 form, which would have become effective March 31, 2018. The OMB reviews agency forms like this pursuant to the Paperwork Reduction Act and determined that the EEOC’s new EEO-1 had been unlawfully developed by the EEOC had underestimated the burden on employers it its published estimate. The PRA was enacted into law in 1980 and since then has required agencies to estimate the paperwork burden any new bureaucratic action would require. Here the OMB determined that the EEOC’s previously published estimate was simply, and significantly, too low. Specifically the new EEO-1 form would have required employers who are subject to EEO-1 reporting (typically employers of 100 or more) to report wage and hours worked for all employees by race, ethnicity and sex, all within 12 specified pay bands. The OMB determined that the public had not been properly apprised by the EEOC of the burdens such a requirement would entail.
The OMB’s ruling comes after much controversy over the new EEO-1 form. Commentators criticized the EEOC’s approach not only as being overly burdensome but also as overly simplistic. Commentators noted it would have created the impression that workers within the same pay bands should be paid the same amounts (irrespective of their gender, race, etc.) despite the fact that they may work in very different positions within those bands. Likewise it has been noted that the EEOC’s approach overly simplified compensation practices by not properly allowing for articulation of base wages versus bonuses, commissions, overtime and non-wage benefits that form part of a compensation package.
Although a part of the White House, the OMB is often seen as a non-partisan watch dog.
The OMB’s ruling leaves the EEOC’s proposed EEO-1 for 2018 dead in the water. The OMB has invited the EEOC to continue the OMB’s examination of the proposed EEO-1 form if it believes the form defensible. The OMB has also noted the EEOC’s prior EEO-1 would be acceptable for use. The EEOC has announced it is considering its options. Employers must wait for the EEOC’s decision to determine what form to use in the future.
Source: OMB Memoradum re EEO-1 Form, Review and Stay (8/29/17)