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Employers Should Be Prepared to Collect Employee Pay Data Again on the EEOC’s Annual Survey

Christopher Wood, CPP  

Christopher Wood, CPP  

The Equal Employment Opportunity Commission majority is poised to change in favor of the Democrats in the near future, which may mean the further collection of employee pay data by certain employers.

In late-July 2022, the Equal Employment Opportunity Commission (EEOC) announced a report from a nonprofit that evaluated the Commission’s required employee pay data collection from certain employers for 2017 and 2018 that was due in 2020. This type of pay data collection may again be a reality for many employers when the majority of the Commission’s five-members tips in favor of the Democrats.

What is the EEOC?

The EEOC is a federal agency established through the Civil Rights Act of 1964. It is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, national origin, disability, or genetic information. The EEOC is comprised of five Presidentially appointed members, including the Chair, Vice Chair and three Commissioners. Certain employers must complete and submit certain reports with employee information.

EEO-1 report Component 1 data. 

The EEO-1 annual survey report is required to be submitted to the EEOC by: (1) employers with federal government contracts of $50,000 or more who have 50 or more employees, and (2) employers who do not have a federal government contract but have 100 or more employees. These employers must provide a count of their employees by job category and then by ethnicity, race, and gender. This is called Component 1 data.

EEO-1 Component 2 data.

In 2016, there was an expanded requirement from the EEOC to add employee pay data to the EEO-1 report. The data is referred to as Component 2 data and includes employee wage data from Box 1 of the Form W-2 (Wage and Tax Statement). However, the Office of Management and Budget (OMB) put the requirement on hold in 2017 until legal action was taken.

In April 2019, a district court ruling required certain employers to collect the Component 2 pay data for the 2017 and 2018 calendar years [Nat’l Women’s Law Ctr. v. OMB, D.D.C., Dkt. No. 17-2458, 4/3/19]. The report was required to be submitted to the EEOC by employers and federal contractors if they had 100 or more employees during the 2017 and 2018 workforce snapshot periods (an employer selected pay period between October 1 and December 31 of the reporting year). The due date was January 31, 2020.

Component 2 data findings. 

On July 28, 2022, the National Academies of Sciences, Engineering, and Medicine issued a Consensus Study Report evaluating the U.S. Equal Employment Opportunity Commission’s historic, first-time collection of pay data from certain private employers and federal contractors, which was completed in February 2020. The report contained multiple findings, including significant pay gaps it said are worthy of further investigation within Silicon Valley businesses.

EEOC Commissioner says pay data collection is coming back.

At the April 22, 2022 DirectEmployers Annual Meeting & Conference (DEAMcon), EEOC Commissioner Keith E. Sonderling warned that the Component 2 pay data collection requirement on the EEO-1 report would return. “Watch out, it is coming. Talk to your bosses,” Sonderling said during a seminar.

Why should employers prepare? 

As mentioned before, the EEOC consists of five members who administer the law. No more than three members can be of the same political party. On July 1, 2022, Janet Dhillon’s term on the EEOC expired. Currently, Kalpana Kotagal is President Biden’s nominee to replace Dhillon, which would tip the Committee three to two in the Democrats favor.

However, until Kotagal is approved, Dhillon is allowed by federal law to remain on the Commission, which she has. The U.S. Senate approves EEOC nominations and will likely resume in September 2022. So, before she is approved, it is not likely there will be any changes regarding pay data reporting.

That said, based on Sonderling’s comments from April 2022, he appears to feel confident that once the Democrats have the majority on the EEOC, pay data will again be a requirement for the EEO-1 report.  So, it may be in the best interests of employers that have to submit an EEO-1 report to start having a conversation about the steps needed to again report pay data with the annual survey.

States and pay data reporting. 

California now requires employers with 100 or more employees to report pay and hours-worked data by establishment, job category, sex, race, and ethnicity to the Civil Rights Department (CRD) annually. The first report was due on April 1, 2022.

Also, beginning March 24, 2022 through March 23, 2024, there are new payroll reporting obligations for Illinois employers under the Illinois Equal Pay Act (IEPA) that requires employers with 100 or more employees to register and report extensive payroll information to the state’s Department of Labor.

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