The OFCCP’s EEO-1 Data Release and What You Need to Do Next
The return of EEO-1 Component 2 reporting, which was reversed under the Trump administration but could be reinstated as a priority under Biden’s administration, would cause many employers to scramble to meet the requirements in time to comply with reporting deadlines.
Recently released data from the Office of Federal Contract Compliance Programs (OFCCP) includes data from contractors that proactively agreed to have their data released. Those that objected or simply failed to respond had until March 31 to continue to object.
For some companies, the release of this data has the potential to show them in a negative light from a pay equity standpoint in terms of their diversity and inclusion efforts.
What happens next has implications for federal contractors and employers who will likely be asked to share similar data in the future. The SEC already has a requirement to share board diversity, and it’s likely only a matter of time before they ask to see company diversity numbers overall. Employers in tight labor markets or searching for talent in limited supply could also be impacted as diversity and inclusion have risen in importance for many employees, especially those in younger generations. Here’s what you need to know—and what you need to do next.
What Happened: A Sequence of Events
The EEOC has collected demographic data on employees broken down by gender, race/ethnicity, and job category—known as Component 1 data—from employers with more than 100 employees for some time. In 2019 a new requirement—Component 2—was added, requiring the addition of employee pay data, also broken down by demographics for a snapshot period for years 2017 and 2018.
EEO-1 “Component 2” refers to pay data that some employers are obliged to file as part of their EEO-1 report (W-2 information by gender, race, and job category). The most recent deadline for submitting this data was September 30, 2019 and was for data on wages and hours from the 2017 and 2018 reporting periods. Employers that employed more than 100 employees during the 2017 and 2018 “workforce snapshot periods” were required to submit Component 2 data for each reporting year and for all full-time and part-time employees. (Note: the “workforce snapshot period” is an employer-selected pay period between October 1 and December 31).
It was a short-lived requirement, though, as the Trump administration quickly shot it down.
While not yet official, EEOC Commissioner Keith Sonderling has said that it’s coming back and has warned employers to watch out.
In August 2022, the OFCCP gave notice of its intent to publicly release federal contractors’ EEO-1 data in response to a 2019 Freedom of Information Act (FOIA) request from the Center for Investigative Reporting (CIR) which asked for all type 2 consolidated EEO-1 reports filed by federal contractors starting in 2016 to be released. About 15,000 federal contractors were impacted. Contractors were notified in August and given a deadline of October 19, 2022, to object to the release of the data.
At the time, the OFCCP also indicated that employers might dispute the request under the FOIA’s Exemption 4 which says organizations don’t have to disclose privileged or confidential commercial, or financial information or information that would reveal trade secrets. They gave companies until September 19, 2022, to file objections.
In December 2022, the OFCCP announced that it will release several years of EEO-1 type 2 reports, giving companies a deadline of no later than January 2, 2023, to notify them if they believed an error had occurred related to their company’s data inclusion.
On February 2 and February 16, 2023, the OFCCP published a list of contractors, correcting and updating the February 2 list to include contractors that had objected but whose names had still been on the list.
On March 10, 2023, a second, updated list of impacted federal contractors was released; these contractors were given until March 31 to submit a formal request if they felt their employee pay data or compensation data should be withheld.
Why Federal Contractors Might Object
In addition to FOIA’s Exemption 4, contractors may have other cause to object to the release of their data. Littler reports: “The OFCCP has acknowledged stakeholder concerns regarding the production by OFCCP of any Type 2 report that covers fewer than 150 employees, or where small numbers in any one EEO-1 Job Category make it possible to identify the sex, race, or ethnicity, or individual employees.”
Next Steps: 1) Analyze Your Data, 2) Take Steps to Address Any Issues
It’s not just federal contractors that need to take steps to ensure they’re ready to file EEO-1 data. All companies will be impacted. If you have not already taken steps to evaluate your data in preparation, you need to act now. You should be both analyzing your data and taking steps to address any pay equity issues or pay disparities that may come to light.
Trusaic’s PayParity software can help. It’s an always-on, all-in-one DEI software solution. Trusaic can provide a full analysis of your HR data and prepare your EEO-1 filing to provide you with complete visibility into any potential issues around pay equity. Ensure on-time and accurate reporting while gaining insights into how you can proactively make changes to your DEI initiatives to address any issues.
With pressure mounting for organizations to prove they foster diverse, equitable, and inclusive workforces, employers must commit to prioritizing workplace equity. Our research report, Creating a Culture of Diversity, Equity, and Inclusion, details how organizations can ensure their successful with their efforts. Download it now to learn more.