This March 5 story has been updated with additional analysis.
The U.S. District Court for Washington D.C. reinstated the EEO-1 pay data collection requirements March 4. The decision rendered by the Court came just a couple months before the May 31 EEO-1 Report filing deadline.
The EEOC adopted the new requirements under the Obama administration. The revised EEO-1 would have required employers with 100 or more employees to report W-2 wage information and total hours worked for all employees by race, ethnicity and sex within 12 proposed pay bands.
The pay data collection requirement was originally scheduled to go into effect on March 31, 2018, but it stalled when the Trump Administration’s Office of Management and Budget (OMB) stayed the implementation of pay data collection portions of the revised EEO-1 Report. That decision prompted a lawsuit by the National Women’s Law Center and the Labor Counsel for Latin American Advancement against the OMB and the EEOC.
In its decision, the Court concluded that OMB’s action staying the EEOC’s pay data collection tool was an “illegal” arbitrary and capricious decision that lacked a “reasoned explanation.” As a result, the Court vacated the stay and ordered that the previously approved revised EEO-1 Report that required the collection of pay data form take effect.
The ruling came as a shock to many, including Jim Paretti, shareholder at Littler. Paretti, who was formerly chief of staff and senior counsel to acting chair of the Equal Employment Opportunity Commission (EEOC), Victoria Lipnic, said he anticipates the Department of Justice (DOJ) will appeal the Court’s decision in relatively short order.
“I think it’s very, very difficult to expect either the (EEOC) or impacted employers to have to file this exponentially expanded information in this current reporting cycle by the end of May,” Paretti said. “Personally, I think this is a case where you should go into the court and ask for stay of the order, pending an appeal. This is exactly the set of circumstances that should grant those sorts of stays.”
Citing the Paperwork Reduction Act, which is intended for situations such as the EEO-1 to give the OMB the authority to determine if the benefit of collecting pay data outweighs the cost, Paretti said the Court “missed the forest for the trees” with its ruling.
“Similarly, if the court is bound and determined to say ‘EEOC, you must collect this data by the end of May,’ — that may simply not be logistically possible,” Paretti said. “A court can order oranges to grow on apple trees. It doesn’t mean it’s going to happen.”
Melissa Sharp Murdock, WorldatWork’s director of external affairs, noted that Lipnic is on record opposing this particular reporting requirement so that may impact how the EEOC moves forward. In the meantime, employers are in a holding pattern awaiting the EEOC’s guidance on this issue. Paretti said he expects that guidance come within the next week and that employers should sit tight until it does.
“I think it would be an overreaction for everybody to start turning on their systems today to try and gear up for this,” he said.
Murdock said she wouldn’t be surprised if the EEOC extends the deadline for employers to report on the revised W-2 wage information and total hours worked. Paretti said he believes the DOJ has strong grounds for an appeal or a stay that would push back the collection of the pay data another year.
“What is the irreparable harm of saying let’s hold it until the resolution of this? You maybe you lose one year of data tops,” Paretti said. “Frankly, the agency has gotten along with 52 to 53 years without this information. I’d humbly submit that it could get by one more year. To do otherwise would really seem to be forcing an issue and forcing a lot of government time and resources and stakeholder time and resources to be expended without knowing at the end of the day if this was really what was needed and had to happen under the law.”
WorldatWork submitted formal comments to the EEOC and OMB during the consideration of the new reporting requirements in 2016. WorldatWork opposed the new reporting requirements raising legitimate concerns regarding the appropriateness and efficacy of providing W-2 data and hours worked.
About the Author
Brett Christie is a staff writer at WorldatWork.