EEOC Confirms It Will Discontinue EEO-1 Pay Data Collection

Today, the EEOC formally confirmed that it will not renew its request for authorization to collect employer’s pay data under Component 2 of the EEO-1 moving forward.  The notice is consistent with its announcement last September, marking the end of a four-year saga over whether the pay data collection would go ahead (as we reported here, here, and here).  Notably, the notice does not explain how the EEOC intends to use the pay data it already has collected, although it makes reference to using it in Title VII proceedings.  It does, however, confirm the EEOC’s intentions regarding sharing the EEO-1 pay data, including that the EEOC does not intend to share it with the Office of Federal Contract Compliance Programs (“OFCCP”), but under certain circumstances may share it with state and local fair employment practices agencies (“FEPAs”).  The notice also provides guidance regarding a potential pay data collection by the EEOC in the future, including that the EEOC intends to “develop a plan for using pay data before initiating any data collection.”

To briefly summarize the history leading up to today’s notice, the EEOC announced in January 2016 its plan to revise the EEO-1 form to collect pay data, including data on employees’ W-2 earnings and hours worked across broad job categories, and broken down by ethnicity, race, and sex.  The Office of Management and Budget (OMB) initially approved the revised EEO-1 form on September 29, 2016, but following a change in administrations, stayed implementation of the revisions in August 2017 on the basis that the earlier approval underestimated the burden on employers to comply, and therefore did not properly balance that burden against the revised form’s utility.  In response, the National Women’s Law Center and the League of United Latin American Citizens (LULAC) challenged this action in court.

On March 4, 2019, in National Women’s Law Center, et al. v. Office of Management and Budget, et al., Civil Action No. 17-cv-2458 (D.D.C.), U.S. District Court Judge Tanya S. Chutkan ruled the OMB’s decision to stay the collection was “arbitrary and capricious” and lacked the reasoned explanation required by the Administrative Procedure Act.  Under Judge Chutkan’s order, the 2017 and 2018 EEO-1 reporting requirements consisted of two components: Component 1 demographic data (employees broken down by gender, race/ethnicity, job category), and Component 2 pay data (employees’ W-2 income information broken down by gender, race/ethnicity, job category).

The pay data collection for 2019 and forward, however, was not addressed by the court case or Judge Chutkan’s order.  In September 2019, the EEOC announced that it had “insufficiently calculated what the burden would be [for employers] to submit data”—essentially echoing the OMB’s rationale for staying the collection in the first place.  As a result, it stated that it had no plans to seek renewal of the pay data collection efforts for years 2019 and forward unless it determined that the “utility of the data” outweighed “the burden the data collection . . . imposes on the employers who must submit it.”

After summarizing the numerous comments the EEOC received in response to its announcement in September, today’s notice confirms the EEOC’s initial assessment: the Component 2 collection is simply not worth it.  Specifically, the EEOC announced:

After evaluating the comments and holding a public hearing, the Commission will not seek OMB approval for an extension of Component 2 [ pay data’. The Commission concludes that at this time it cannot state that Component 2 data has significant practical utility in assisting the Commission in fulfilling its mission in combating illegal employment discrimination.  The Commission’s decision is supported by written comments and by testimony at the November 20, 2019 hearing from those with actual experience collecting Component 2 data.  . . .  the Commission cannot justify continuing to collect Component 2 data.

Although many employers are eager to know how the EEOC intends to use the pay data it already has collected, today’s notice does not explicitly address that issue.  It does, however, contain a section entitled “Data Sharing,” in which it explains, “Title VII forbids the EEOC or any EEOC officer or employee from making public any information, including EEO-1 data, before a Title VII proceeding is instituted that involves that information.”  This statement indicates that the EEOC may use the pay data in connection with Title VII proceedings.

With respect to whether the EEOC will share the pay data of federal contractors with OFCCP, the notice explains that “in light of the OFCCP’s announcement of its decision not to request, accept, or use Component 2 data from the EEOC, the EEOC does not intend to provide any Component 2 data to OFCCP.”

The notice further explains that, consistent with Title VII and the EEOC’s current practice with respect to EEO-1 data, the EEOC will share pay data with state and local fair employment practices agencies (for example, the Department of Fair Employment and Housing (“DFEH”) in California) “only upon request,” and only “for an employer within the FEPA’s jurisdiction and only when that employer is a respondent to a particular charge of discrimination cited by the FEPA in its data request.”  The notice also confirms that “Title VII authorizes the EEOC to decline to honor a FEPA’s subsequent requests for information if the FEPA violates Title VII's confidentiality requirements.”

Finally, with respect to any potential pay data collections by the EEOC in the future, the notice explains:

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 because a pay data collection would be a significant new collection and reporting requirement. The EEOC believes that there should be a transparent and open process, aligning with the recommendations in the EEOC-commissioned 2012 study from the National Academy of Sciences (NAS), entitled “Collecting Compensation Data from Employers,” (NAS Study), that the EEOC:

1. 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 of 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. Uses a definition of compensation that is measurable, collectable, and meaningful.

Written comments on the notice may be submitted through April 22, 2020 here.  Stay tuned for any further developments.