On March 4, 2019, Judge Tanya S. Chutkan of the U.S. District Court for the District of Columbia vacated an Aug. 29, 2017, decision by the Office of Management and Budget (OMB) to stay the Equal Employment Opportunity Commission (EEOC) requirement that employers use a revised EEO-1 form to report pay data information by employee job position, gender, race and ethnicity. The possible inclusion of pay data on the EEO-1 has been a source of uncertainty for employers over the past two years.

The EEO-1 is used by the EEOC to collect information from employers on an annual basis. Specifically, employers with at least 100 employees and federal contractors with at least 50 employees and a contract of $50,000 or more with the federal government must file the EEO-1, which identifies by job category, race, sex and ethnicity the number of employees who work for the business.

In August 2016, the OMB approved a rule proposed by the EEOC to expand to include pay data the information collected from employers in the EEO-1. In September 2016, the EEOC issued a revised EEO-1 form expanding the data to be reported by employers to include (1) pay data for all full- and part-time employees by race and gender in each EEO-1 job category for each of the employer's physical locations and (2) the number of hours worked by employees in each pay band. The EEOC's announcement was controversial and met with immediate pushback from employers objecting to the burden of having to collect and report pay data.

One year later, on Aug. 29, 2017, the OMB announced the immediate stay of the rule. The OMB issued a memorandum explaining that it was authorized under the Paperwork Reduction Act to review the EEOC's rule because the EEOC inaccurately estimated the burden that the pay data requirements would place on employers.

In response to the stay, the National Women's Law Center and the Labor Council for Latin American Advancement brought a lawsuit against the EEOC and the OMB, challenging the OMB's authority to issue the stay.

The case appeared before Chutkan, who found that the OMB's stay decision was "arbitrary and capricious" and did not comply with the OMB's own regulations governing an OMB decision to review and/or stay a previously approved collection of information by a federal agency. Moreover, the OMB did not show good cause to support its position that the EEOC has underestimated the burdens on employers to comply with the pay data collection requirements.

Chutkan's decision reinstates pay data reporting provisions of the EEOC's EEO-1. The EEO-1 website opened on March 18, 2019, in preparation for the 2018 EEO-1 filings due on or before May 31, 2019. Notably, the portal for submitting the 2018 EEO-1 does not include a pay data request. While no official announcement has been made regarding when the EEOC will start collecting pay data, the agency recently released a statement stating that it would provide "further information as soon as possible."

Key takeaways

It remains to be seen whether the Justice Department, which defended this case, will appeal or seek clarification of Chutkan's order and whether the EEOC and/or the OMB will take further action.

In the interim, employers should review their internal reporting systems to ensure they can produce the pay data that they will eventually be required to report. However, employers should wait until additional guidance is released by the EEOC regarding the reporting of such data before undertaking any extensive data collection.

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