Mergers and Acquisitions and Other Guidance Published for Component 2 Pay Data Reporting
In an effort to provide additional guidance to employers navigating the new Component 2 pay data filing requirements, the Equal Employment Opportunity Commission (EEOC) and NORC have just updated its frequently asked questions (FAQs) with respect to how employers experiencing mergers, acquisitions, and spinoffs during 2017 and 2018 should be filing their 2017 and 2018 Component 2 reports. Additionally, the EEOC has included new information on filing obligations for Professional Employer Obligations (PEOs). in addition to the website materials, we understand messages to the NORC HelpDesk are being returned promptly.
The new FAQs provide the following guidance:
Mergers & Acquisitions
Regarding mergers and acquisitions, the general expectation is – whether the event occurred before or after the employer’s selected 2017 workforce snapshot – the acquiring/new employer submit 2017 Component 2 data for the acquired subsidiary or the newly formed company. In some instances, the company experiencing a merger or acquisition will not have access to the former company’s data. If that is the case, the company should note this in the comments box under the certification section of the Component 2 online filing system.
Where a company spins off from another in 2018, the spinoff company is not responsible for filing 2017 Component 2 data for its employees, as it was still affiliated with the former parent company at that time. Instead, the former parent company would be responsible for filing 2017 Component 2 data for those employees, and the newly formed Company would be responsible for its 2018 Component 2 data. Alternatively, parent companies selling a portion of their business in 2018 are not required to file 2017 and 2018 Component 2 data for those employees – that becomes the purchasing company’s obligation. Again, should data access issues arise, companies are advised to note this in the online filing system.
The EEOC has advised that a PEO is not responsible for filing Component 2 data of entities that are former clients at the time of filing. Further, when a PEO and a client company’s contracting agreement does not include 100% of the covered client company’s employees, the covered client company – not the PEO – is responsible for filing Component 2 data.