On March 4, 2019, a federal court in Washington, D.C., ordered the Trump administration to reinstate an Obama-era rule that had been placed on hold. The court ruling will require employers to annually report pay data by gender, race and ethnicity to the Equal Employment Opportunity Commission (EEOC).

EEO-1 Disclosure Requirements

For decades, the EEOC has required private employers with 100 or more employees to annually file an EEO-1 report, which breaks down the number of employees in different job categories by gender, race and ethnicity. Federal government contractors and subcontractors with 50 or more employees also are subject to this reporting requirement.

In 2016, after receiving approval from the White House Office of Management and Budget (OMB), the EEOC issued a rule expanding EEO-1 reporting requirements to include W-2 wages and total hours worked in the prior year for all employees in 12 proposed pay bands. The EEOC's stated intent of the proposed requirement was to "identify discriminatory pay practices where they exist in order to ensure that fair pay practices are put in place." The requirement was set to take effect with the EEO-1 reports to be filed by employers in 2018. However, in August 2017, the OMB put the measure on hold, on the grounds that it was unnecessarily burdensome for employers and the OMB needed additional time to review the new requirement.

The National Women's Law Center and the Labor Council for Latin American Advancement sued the OMB to reinstate the revised reporting requirements, and on March 4, 2019, the U.S. District Court for the District of Columbia ordered the OMB to do just that. The court held that the OMB did not assert a proper justification to block a measure that it previously approved, finding that the decision was "arbitrary and capricious" and exceeded the OMB's administrative authority. Accordingly, the court lifted the hold, reinstated the pay data collection rule and ordered that the previously approved EEO-1 form, which included pay data information, will be in effect.

What This Means for Employers

It is not clear how this ruling will impact the 2018 reporting period, for which the current deadline for employers to file EEO-1 reports is May 31, 2019. As of the date of this Alert, neither the OMB nor the EEOC has commented or provided guidance in response to the court's ruling. Notably, the court specifically found that requiring employers to comply with the requirement to report pay data in 2019 would not be disruptive because the pay data requirement had been in place for almost a year before it was blocked and employers have been on notice that the stay could be lifted at any time. However, if the OMB files an appeal or seeks further clarification of the court's order, the court's ruling likely will be stayed.

If employers are required to submit pay data this year, it is anticipated that, given this surprise ruling, the EEOC will extend the May 31, 2019, EEO-1 reporting deadline—which already has been extended once due to the government shutdown—to allow employers sufficient time to aggregate pay data.

Duane Morris will continue to follow further developments on this ruling.

For Further Information

If you have any questions about this Alert, please contact Christopher D. Durham, Danielle M. Dwyer, any of the  attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.