Bill Has Come Due: Employers Must Provide Pay Data to EEOC by Sept. 30

By: Attorney David A. Richie– Weld Riley, S.C.

On April 25, 2019, a federal district court in Washington D.C. issued a ruling that ordered all mid-size and large employers to collect data about how much they pay their employees – broken down by sex, race, and ethnicity – and submit that data to the U.S. Equal Employment Opportunity Commission (EEOC) by September 30, 2019.

The court’s ruling accepted the EEOC’s proposal to require employers to submit their 2018 pay data this fall. However, the order also requires the EEOC to collect a second year of pay data, giving it the option of collecting employers’ 2017 data or collecting 2019 data down the road. The EEOC had until April 29 to put a statement on its website informing employers of the judge’s decision, and has until Friday, May 3rd, to decide which second-year data to collect.

The mandate that employers collect pay data broken down by sex, race, and ethnicity was first adopted by the Obama administration in an effort to eliminate gender- and race-based pay gaps. The form used to collect this data is known as “Component 2” of the EEO-1 form.

Component 2 requires most employers with over 100 employees to report certain pay data. These employers must report pay data for employees who were employed during the “Workforce Snapshot Period,” which is a pay period of the employer’s choosing that falls between October 1 and December 31. Employees who were employed in the Snapshot Period are then broken down by sex, race, and ethnicity within each of the ten EEO-1 job categories who fall within 12 defined “pay bands.” For each job category and pay band, the employer must also report hours worked data for the applicable employees.

Each employee’s pay band is determined based on their W-2 Box 1 income. As for the hours worked data, an employer’s reporting requirement differs for exempt and non-exempt employees. For non-exempt employees, employers must report the total number of hours worked for the entire calendar year for all employees in each pay band, again broken down by sex, race, and ethnicity. For exempt employees, employers have two options: (1) employers may use a 40 hour per week proxy for full-time employees and a 20 hour per week proxy for part-time employees, multiplied by the number of weeks the individuals were employed during the EEO-1 reporting year, or (2) employers may provide the actual hours worked during the EEO-1 reporting year (if the employer maintains accurate records of that information).

While the EEOC has until early May to appeal the judge’s ruling, it is unknown at this time whether the agency intends to do so. Accordingly, employers who have not yet installed software to assist in data collection or who have not otherwise begun their data collection process may want to take action soon rather than relying on a possible reversal or stay of the district court’s decision.

Additional information from the EEOC’s website can be found here.