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EEOC Will Not Seek to Renew Component 2 (Pay and Hours Data) Requirements for Future EEO-1 Reports

The EEOC announced today, September 12, 2019, that it “is not seeking to renew Component 2 of the EEO-1” in a notice published on the Federal Register.

As we have previously reported, Component 2 of the EEO-1 report requires employers with over 100 employees to report its employees’ compensation and hours worked (sorted by pay band, job category, race ethnicity, and gender). The Obama Administration initially adopted the addition of Component 2 reporting requirements, but its implementation was stayed by the Office of Management and Budget (“OMB”) in 2017. The OMB stay was challenged in National Women’s Law Center et al v. Office of Management and Budget, where the federal district court for the District of Columbia ruled that the OMB failed to sufficiently justify blocking the implementation of the Component 2 requirement. Subsequently, in April 2019, the court ordered that covered employers must report Component 2 data by September 30, 2019. The EEOC’s September 12th decision not to seek the renewal of the Component 2 requirements indicates that this may be a one-time reporting requirement for employers.[1]

Under the Paperwork Reduction Act (“PRA”), the EEOC must request approval from OMB when it seeks to require certain disclosures of information from the public, and renew such requests prior to the expiration of OMB’s approval (an approval typically expires 3 years after it is granted.) The current approval for the current EEO-1 expires on September 30, 2019. The EEOC filed the September 12th notice to renew its request to collect Component 1 data, and to clarify that it is not seeking to renew its request to collect Component 2 data. The EEOC based its decision not to seek the renewal of Component 2 on the “unproven utility” of pay data to its enforcement programs. The agency noted that, under the PRA, it has a responsibility to “balance the utility of the data it collects against the burden the data collection as structured imposes on the employers who must submit it.” According to the EEOC “the burden estimate associated with the EEO-1 is higher than it [] previously estimated”. The EEOC’s previous burden estimation put the total annual burden hour cost for completing both Components 1 and 2 of the EEO-1 at $53,546,359.08. The EEOC has “developed a more accurate methodology” for calculating the burden cost to employers and estimated that the “burden hour costs for submitting both Components 1 and 2 would be $614,391,388 in 2017 and $622,015,798 in 2018.” The EEOC concluded that the utility of collecting Component 2 data was “far outweighed” by this immense reporting burden on employers.

The September 12th notice states that, despite the higher burden indicated above, the EEOC will continue its collection of Component 1 data (which is limited to race and sex information) in light of its long proven utility in the enforcement of employment discrimination laws.

Even though the EEOC’s decision is welcome news, employers still must make their 2017 and 2018 Component 2 submissions by September 30, 2019 and the EEOC may resurrect Component 2 at a later time. Moreover, if we have learned anything over the past six months it is the difficulty of predicting what will happen when it comes to Component 2. In other words: Stay Tuned.

We will continue to report on this developing story as new details emerge.


[1] The September 12th notice states that “if the EEOC seeks to pursue a pay data collection in the future it will do so using notice and comment rulemaking and a public hearing pursuant to Title VII of the Civil Rights Act of 1964.”

© 2019 Proskauer Rose LLP.

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About this Author

Guy Brenner, Labor Attorney, Proskauer Rose, arbitration proceedings Lawyer
Partner

Guy Brenner is a partner in the Labor & Employment Law Department and co-head of the Non-Compete & Trade Secrets Group. He has extensive experience representing employers in both single-plaintiff and class action matters, as well as in arbitration proceedings. He also regularly assists federal government contractors with the many special employment-related compliance challenges they face.

Guy represents employers in all aspects of employment and labor litigation and counseling, with an emphasis on non-compete and trade secrets issues,...

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Kate Gold Labor and Employment Lawyer Proskauer
Partner

Kate Gold is a partner in the Labor & Employment Law Department in the Los Angeles office.

Kate has over 25 years of experience representing clients in a range of industries, across all areas of employment law.  An experienced litigator, she has represented clients in all types of employment-related suits, including class and collective actions, discrimination, retaliation and harassment, non-compete and wage/hour matters.  In addition to litigating, she conducts high-level workplace investigations and routinely counsels clients on matters involving the full range of state and federal employment issues.

Kate also represents clients in disputes involving  misappropriation of intellectual property and trade secrets, interference with contract, and unfair competition. Kate also counsels on classification of employees, employment issues in the context of purchase and sale of businesses, and non-competition agreements. Additionally, she negotiates and drafts executive employment and separation agreements and conducts training on sexual harassment prevention.

Kate received her B.A. and J.D. from the University of California, Berkeley.

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Associate

Mark Linscott is an associate in the Labor & Employment Law Department and assists clients with a wide range of labor and employment law matters.

Prior to joining Proskauer, Mark attended Seton Hall University School of Law where he served as a senior associate editor of the Seton Hall Circuit Review. Mark also worked as a clinical law student at the Seton Hall Civil Litigation Clinic and as summer intern at the New Jersey Office of the Public Defender. In addition, Mark served as a research assistant to Professor Jonathan Hafetz.

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