Leading up to the EEO-1 filing deadline of March 31, the Equal Employment Opportunity Commission (EEOC) said that it will not continue to require employers to submit pay data known as Component 2 when submitting the annual EEO-1 report, for now.
The EEOC said in an official notice, “Based on the Commission’s evaluation of the public comments received in response to the 60-Day Notice and the agency’s own burden calculations, 28 and because the PRA requires an agency to demonstrate that the practical utility of the information collection outweighs the burden of the collection, the Commission cannot justify continuing to collect Component 2 data.” Employers should hit the “pause” button but before writing off EEOC pay data collection as a done deal, however. In 2019, a federal district court ordered the EEOC to collect Component 2 data. That case, National Women’s Law Center v. Office of Management and Budget, is pending an appeal.
Additionally, Trusaic filed a public comment taking issue with the EEOC’s burden calculations. Due to what essentially amounts to a math error, the EEOC appears to have significantly overestimated the compliance burden of EEO-1 Component 2. On its own, the public comment may have no legal effect, but if others point out the same issue the EEOC could be forced to review its own burden calculations.
While the Component 2 data collection for 2017 and 2018 has now been completed, Component 1 for future years will continue.
The agency stated on its website that it is “currently in the process of seeking approval under the Paperwork Reduction Act (PRA) to collect the EEO-1 survey for 2019, 2020, and 2021.” This EEO-1 survey information at this time will only apply to Component 1 of the survey data.
Employers should anticipate the opening of the data collection and the new deadline to be posted on the EEOC website.
To determine if your organization is required to file an EEO-1 Report, click here.
In regards to having employers to provide Component 2 pay data in the future, the EEOC stated that it would take the following steps in order to increase transparency:
1. Develops a plan for using pay data before initiating any data collection. Clearly articulating the ultimate uses of the data will help determine both which data elements need to be collected as well as the best approach to collecting the data to ensure the validity, reliability, and utility for the data collected.
2. Initiates a scientifically sound pilot study to test the pay data collection instrument and the plan for the use of the data; and
3. Use a definition of compensation that is measurable, collectable, and meaningful.
The EEOC’s comments suggest two things: one, that Component 2 pay data reporting may be required by employers in the future; and two, the agency will be better prepared to assess the pay data information. Employers, that means taking advantage of the time now so that pay data reporting doesn’t catch your organization off-guard.
This type of audit not only identifies problems, but also provides actionable solutions. It gives employers an opportunity to ensure fairness in pay and prevent employee compensation disputes. It allows the employer to minimize risk by identifying and remediating deficiencies, providing the employer with greater standing to defend against and win claims of discrimination. Having this knowledge in hand before being required to by a government agency gives employers the ability to provide insights into what the pay data is saying, and how to address pay issues proactively.
A pay equity audit not only helps identify any pay disparities, it brings to light the value of data quality. A recent report by Harvard Business Review Analytic Services, 90% of U.S. employers are planning, considering, or already performing internal pay equity audits.
If you have any questions regarding the annual EEO-1 report, check out this FAQ.
Organizations looking to disclose pay equity, diversity, and inclusion data information should do so within an ESG reporting framework. Download our white paper, DEI in ESG Reporting to learn about the different standards you can leverage for sharing your progress.