New Wage and Hour Data to be Collected by the Federal Government as Part of the EEO-1 Reporting Process

Pursuant to Title VII and 42 U.S.C. Chapter 60, a company must annually file an EEO-1 Report with the Equal Employment Opportunity Commission Joint Reporting Committee (JRC) if it answers “yes” to any of the three jurisdictional questions:

1.       A company that has 100 or more employees;

2.       A company that is affiliated through common ownership and/or centralized management with other entities in an enterprise with 100 or more employees;

3.       A company or any of its establishments with 50 or more employees and a prime contract or first-tier subcontract with the federal government of at least $50,000.

The EEO-1 Report provides race/ethnicity and gender information for all employees classified in one of 10 EEO job groups.

During the Obama administration, the Equal Employment Opportunity Commission (EEOC) proposed changing the EEO-1 reporting process to include the collection of wage and hour data. The change was due to be implemented in CY 2018 for FY 2017 data. Under the Trump administration, the EEOC stayed this collection. On March 4, 2019, the United States District Court for the District of Columbia vacated the Trump order. Over the previous few weeks, the court held hearings and demanded the EEOC put in place a process to allow for the wage and hour data to be gathered. On April 26, U.S. District Judge Tanya Chutkan accepted the EEOC’s proposal to make employers submit their 2018 pay data by September 30, 2019. The reports will be submitted as Component 2 of the EEO-1 form. (See NWLC et al. v. OMB et al., case number1:17-cv-02458, U.S. District Court for the District of Columbia.) Component 1 providing the race/ethnicity and gender data is still due to be filed by May 31, 2019.

The EEOC has until May 3 to inform the court of its intentions regarding the new data collection. It stated previously it did not have the infrastructure to accept data but could employ a third-party contractor to do so on its behalf with an estimated cost over $3,000,000. Details have not been published regarding the mechanism in which employers will upload the files, nor has the EEOC stated if Component 1 and 2 will be submitted separately in the future or merge to a single submission date.

What is known is W2 Box 1 wages and hours worked will be needed to complete the two forms, assuming they don’t change from the original proposals. The hours-worked component is the actual hours paid, including all leave and PTO. For exempt full-time employees, assume 2,080 hours. 

There is no doubt appeals will ensue. It is not clear what will happen between now and September 30. In the meantime, companies should begin the process of gathering the W2 Box 1 wage information and hours-worked data. It is important to understand that just gathering the data is not sufficient. As the form exists currently, employers will need to take the wage data and categorize their employee compensation in 12 different annual pay amounts organized into bands ranging from $19,239 and under to over $208,000.